Messages from Monthly Keidanren, June 2001

Seize the Window of Opportunity
and Push Ahead with Structural Reforms Resolutely

Takashi Imai
Chairman, Keidanren

With globalization of business activities and international competition accelerating on the economic front, and with fewer children and an aging society on the social front, we have reached an extremely critical crossroads where the choices we make will seal the fate of our country.
As the events unfolding during the recent election for the presidency of the Liberal Democratic Party had signaled, many people who felt a strong sense of crisis about the current state of affairs of this country voiced their sympathy and support for an early implementation of structural reforms to make this country a better place to live.
Indeed, it must be said that time is ripe for carrying out structural reforms.
The government and businesses should not let this window of opportunity through their fingers. They should carry out wholesale structural reforms in one fell swoop with an indomitable resolve and build solid economic and social foundations for the new century.

Pressure is mounting on businesses to carry out bold reforms to improve the efficiency of their management and strengthen their earning power, and they must resolutely tackle their biggest problems, particularly, the disposition of bad loans and excessive indebtedness. They cannot afford to put off dealing with these problems if only to regain international confidence in our economy. They must improve the competitiveness of their products and services by splitting or consolidating their operations, or by overhauling their corporate organizations.
It is essential to create an economic environment that will help businesses operation effectively with the new era in order to carry out further reforms of corporate management. In addition to the securities market revitalization measures -- lifting the ban on treasury stock and overhauling the securities transaction taxation system -- proposed in the emergency economic package recently announced by the government, it is necessary to change the legal and tax systems -- a revision of the system of shareholders' class action, the introduction of a consolidated tax system, and the enactment of a law on a defined contribution pension plan -- in ways to conform with global standards.
Creating new industries and new business is an important mission entrusted to us businesspersons. We members of the business community must strive to develop new growth business by taking full advantage of the regulatory reforms and the government's e-Japan strategy, or new bio- or nanotechnologies.
To establish world-class industrial technologies, it is imperative to implement a strategic and comprehensive science and technology policy. It is earnestly hoped that the Council for Science and Technology Policy established in the Cabinet Office will exercise strong leadership, and that steady promotion of the reform of university education, to say nothing of further acceleration of research and development through tripartite cooperation among industry, the government and academe, will be carried out.

Needless to say, structural reforms entail pain. The government must dispel misgivings the people have about their future by formulating -- and publishing -- a comprehensive plan for restructuring its public finances that covers structural reforms of the social security system, government spending and taxation. As regards matters that require urgent action -- such as the reform of medicare for the aged, a cut in the tax money allocated to local governments and a more selective authorization of public works projects and improvement in their efficiency -- steps must be taken in accordance with a clearly defined schedule. In pushing ahead with these reforms, it is important for the government to gain the understanding of, and share the sense of importance of these reforms with, the people by having frequent dialogue with them and by enhancing the transparency of its policy-making process.
Moreover, to build a society befitting the 21st century bubbling with private initiatives and creativity, administrative and regulatory reforms must be carried out in earnest. In the area of administrative reforms, in particular, business carried out by special-purpose corporations (those created under a special enabling law) must be reviewed from scratch, those that have outlived their usefulness must be disbanded or consolidated with others, or privatized where feasible or advisable. In the area of regulatory reforms, government regulations and institutions must be overhauled with a view to reforming the nation's economic and social structure under the strong leadership of the recently established Council for Regulatory Reform Policy.

Lastly, Keidanren and Nikkeiren (Japan Federation of Employers' Associations) plan to become completely integrated into a single organization in May 2002. As a genuine economic organization that has the ability to propose -- and implement -- public policies worthy of the 21st century, we intend to come to grips with problems facing the business community of this country with greater dispatch than before.
I ask for your continued understanding and support in coming years.

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