[ Nippon Keidanren ] [ Policy ]



May 28, 2002

Japan Business Federation
( Nippon Keidanren )

Japan Business Federation was launched today with the aim to become a comprehensive economic organization that addresses a wide range of business-related issues encompassing economics, industry, society and labor. The Federation integrates the experience and networks of Keidanren and Nikkeiren to enhance its ability to propose and implement policy, thereby enabling the new body to resolve issues faced by the business community, including labor-related ones, in a timely and steady manner.

The Federation shall facilitate the creation of a vibrant, appealing and affluent Japan that will enable individuals and enterprises to work freely and creatively, imbued with ambition, skill and strict code of ethics. It seeks to form a consensus in the business community on the establishment of a free, fair and transparent market economy founded on a respect for people and a rigorous adherence to the principle of self-responsibility. It will implement its activities in coordination with regional employers' associations, and move forward in dialogue with a broad spectrum of stakeholders - at the political, government administration, labor union and the general public levels.

The most pressing issue facing the Japanese economy is to break out of prolonged stagnation and a sense of impasse. It is urgent that the government and private sectors work together on the reforms we describe below so as to build a truly private sector-driven socioeconomic system. Japan cannot restore its credibility in the global community unless it carries out structural reforms.

Promotion of business reform

Corporations must strengthen their international competitiveness by pursuing strategies of "selection and concentration" to reorganize their business operations and rigorously reorient their resources toward efficient, prioritized investments in highly profitable sectors. Non-performing loans in the financial sector and excess debts in real business must be written off promptly to restore the intermediation functions of the financial institutions and revitalize industry.
In the labor-related area, stable and sustainable relations between labor and management must be maintained. Wages must be set in accordance with productivity and performance. Businesses must develop human resources in-house, including a new generation of more internationally-oriented leaders, improve the work skills of employees, and work out a greater variety of forms of employment.
At the same time, it is extremely important for individual corporations to make a concerted effort to regain the trust of society by observing high standard of corporate and individual ethics. Corporate executives must exert leadership to promote disclosure of information and step up measures to exert stronger discipline on their employees.
As our economy rapidly globalizes, the government must work to strengthen the international competitiveness of corporations and provide for more flexible and dynamic decision-making and reorganization by redressing high cost structures, reforming the Commercial Code and tax laws to international norms, stabilizing the financial system and further enhancing the capital markets. It is also urgent that the government provide for smoother labor mobility by relaxing regulations, enhancing vocational training and improving the employment safety net.

New business and job opportunities

Corporations cannot fear risk-taking if they are to uncover new demand and expand employment. Business leaders must boldly develop new businesses and new industries, and create new technologies and high value-added products that cannot easily be imitated by competitors in other countries. This will require a stronger partnership among industry, academia and government, and active utilization of the fruits of deregulation.
The government must strategically pursue industrial technology and intellectual property policies that will establish "a nation of creativity in science and technology." This will include reforms of educational systems and the establishment of human resources development systems that are better suited to changing times. In addition, it is essential that the government reform the tax system to promote the development of innovative technologies, enhance the climate for promoting the "IT revolution," strategically and efficiently implement public investment, enact land and housing policies designed to create higher-quality of living environments, rejuvenate cities, and take other possible steps to revitalize the economy.

Small, efficient government at the national and local levels

The government must alleviate anxiety among the general public over growing tax burdens and social security premiums by reforming the fiscal structure in a comprehensive program that encompasses fiscal spending, social security and taxation. It is vital that the government reform the pension and medical care systems to make Japan's social security system sustainable. As more responsibilities must and will shift from the public sector to the private sector, fundamental reforms need to be carried out urgently. In particular, government-affiliated corporations need to be dismantled.
Further regulatory reform is required: Government's role must be transformed from "ex ante (prior) regulations" to "ex post facto (after the fact) monitoring." The judiciary system also requires reform and enhancements to its dispute resolution mechanisms and relief measures.
In conjunction with this, the allocation of responsibilities and tax revenue sources between the central and local governments must be reviewed, and progress must be made on municipality mergers so as to establish a decentralized country with self-reliant local communities based on a clearly defined relationship between benefits and burdens. It is vital that the government achieve development that is suited to the uniqueness of each region.
Corporations must take part in the promotion of and the creation of vibrant and affluent local communities.

Solutions to global environmental issues

Global environmental issues are important as they have vast effects on the future generations. They must be solved with sincerity in a manner that will allow economic development to proceed while the environment is preserved. Corporations must develop innovative environmental technologies while steadily and faithfully implementing the Keidanren Voluntary Action Plan on the Environment. The Federation shall implement measures to further improve transparency and reliability of the Plan.
The government must take the leadership in the formation of a single international framework that integrates the Kyoto Protocol and the U.S. Proposal. The government must also support the development of innovative technologies and clarify and actively promote the position of nuclear power in Japan's energy policy.

Strategic foreign economic policy

The government must redouble its efforts to add impetus to the new round of WTO negotiations in order to further liberalize trade and investment. At the same time, it should actively promote bilateral and regional free-trade agreements that have become a global trend in recent years. The Federation will endeavor to deepen and strengthen its partnership with the government so that its opinions are fully reflected in inter-governmental negotiations.
The Federation will pursue "private sector diplomacy" to promote dialogue with the United States, China and other countries. It will also take active part in policy dialogues with the international institutions such as the OECD and in the activities of the ILO as the representative of employers' organizations in Japan.
In addition, the government must pursue economic partnership agreements with Korea, the ASEAN countries and also with China and others in order to form a free, integrated market in Asia. Along with this, the government and private sectors must work together to develop human resources, enhance parts processing and other supporting industries, and provide assistance to resolve environmental issues in the region.

New relationship between politics and business

Political leadership is essential, in responding to rapidly changing economic climate, with dynamic and bold reforms to the legal and institutional frameworks of our economy and society. To make the reforms certain, it is more important than ever to enhance communication between the political and business communities.
The Federation shall cooperate in the establishment of a new, policy-oriented political system by recommending policies suited to today's economic activities and by increasing awareness for political participation among business people.

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