[ Nippon Keidanren ] [ Policy ]
Provisional Translation

Developing a New Frontier by Nurturing Corporate Dynamism

FY 2004 General Assembly Resolutions

May 27, 2004

Nippon Keidanren
(Japan Business Federation)

Amid the economic recovery trend overseas, the future of the Japanese economy looks increasingly bright as corporate efforts for structural reform yield positive results. It is imperative that corporations, which are the source of prosperity for the national economy, step up their "active management strategy" to build a solid foundation for new growth. By creating new demand and providing stable employment, the corporate sector must contribute to a self-sustaining economic recovery.

It is also essential for corporations to firmly establish ethical rules by listening to the voices of various stakeholders. At the same time, companies must pay attention to the circumstances that surround them and augment efforts to fulfill their social responsibility.

The government's role is to set rules and create a climate conducive to strengthening the ability of corporations to create added value. In addition, the government must also accelerate the transformation of the Japanese economy into one that is autonomous and driven by the private sector, by encouraging the initiative of individuals and local communities.

Nippon Keidanren seeks to build transparent relations with political parties, while promoting donations to them as a part of corporate social responsibility. It is also determined to spare no effort to realize the following goals:

1. Improving the Ability of Corporations to Create Added Value:

(1) Improvement of the corporate law and tax system, and the promotion of regulatory reform

To help corporations meet the challenges of global competition, the government should review provisions of the Commercial Code regarding shareholders' derivative lawsuits, corporate governance system, and corporate reorganization including merger and demerger. The applicable corporate tax rate should be lowered.

In order to encourage innovation and ingenuity in the corporate sector and increase employment opportunities; the government should vigorously carry out deregulation and open up public services to the private sector, thereby creating a market climate attractive to new businesses.

Furthermore, the government needs to review the Antimonopoly Act, with the aim of improving the transparency and effectiveness of the basic rules of economic activities. Such a review is necessary in order to promote competition in the free market climate, to ensure discipline in corporate activities and to strengthen the competitiveness of Japanese corporations in the global market.

(2) Promoting a national strategy for innovation in science, technology, and environment

To make science and technology a driving force of national prosperity; the government should focus its investment in areas of high priority, promote international standardization and facilitate partnerships between industry, academia and government. The government is urged to review rules regarding patent rights for inventions made by employees. Furthermore, it is required to take tougher measures to protect intellectual property, as a way to enhance the competitiveness of Japanese corporations. Efforts should be redoubled to work with the private sector to promote the entertainment content industry.

It is additionally important for the Japanese government and industry to promote Japan's significant global contribution to preserving the earth's environment. This can be done simply by making use of the strength of Japanese companies in environment-related products, technologies and business models to solve international problems, without resorting to tax or regulatory measures.

Furthermore, in view of the need to reduce CO2 emissions, Japan must develop a comprehensive energy strategy, including the greater use of nuclear power and the nuclear fuel cycle technology, combined with the development of hydrogen fuel cells and other clean energy systems.

(3) Strengthening of external trade and economic policy

Japan must continue its effort to strengthen the multilateral international trading system under the WTO as a way to ensure a favorable business climate around the globe for its corporations. It should at the same time continue to help other Asian countries to develop infrastructure and human resources through official development assistance, with the goal of signing Economic Partnership Agreements and eventually to establish an "East Asia Free Trade Area." It is also necessary to improve the climate for foreign direct investment in Japan, and to take positive measures to legally accept foreign workers so as to make use of their economic vitality.

The business community will continue to strengthen ties with foreign governments and business organizations of other countries by actively engaging in private sector diplomacy. Nippon Keidanren will strive to ensure that the views of Japan's business community are reflected in new rules adopted by the World Trade Organization, the International Labor Organization, the Organization for Economic Cooperation and Development and other international organizations.

2. Enhancing Motivation and Initiative of Individuals:

(1) Comprehensive reform of social security, fiscal policy and tax system

The government has an obligation to its citizens to remove the sense of anxiety about their future welfare and ensure that society lives up to its full capability. To that end, the government must carry out a comprehensive and drastic reform of the social security system, fiscal policy and tax system from a perspective of what would be the optimum balance between premiums and benefits in the overall social security programs; which includes pensions, medical care for the elderly and unemployment insurance. In order to ensure the long-term sustainability of these systems, the government must cut expenditure, reduce social security payments and streamline the organizations that manage the program funds; while restraining increases in the burden on taxpayers. It is desirable to keep the burden on current workers and employers from rising too high by making use of consumption tax, to be collected from all residents of Japan. The government should also encourage the entry of a wide range of social service providers so as to give consumers the opportunity to choose freely.

(2) Nurturing a new generation of workers for the 21st century

The government must see education as one of the most important pillars of its national strategy for the 21st century, and should promptly and boldly carry out reforms in order to improve students' ethical responsibility, ambition, knowledge and ability to take action. To help schools provide instruction that meets the needs of society, the business community should actively interact with educational institutions. Businesses can help schools develop curricula and provide various kinds of know-how. They can also help students learn how real companies work and develop professional interest by offering internships and other opportunities to develop career goals. Corporations should observe the business community's ethical guidelines on the screening and the recruitment of job applicants.

(3) Allowing workers to choose how they work

The government and businesses must work together to realize a society in which individuals can choose how they work and live, as they pursue their personal goals. It is essential for the government to implement further reforms of labor laws and provide suitable programs to help individuals improve professional qualifications. For their part, corporate management must work in partnership with employees to promote personnel strategies that would make the best use of human resources with diverse capabilities. The two sides should also work hard to realize the equal participation of men and women in the workforce through education and consciousness raising activities.

3. Promoting Regional Autonomy:

(1) Helping local governments achieve administrative and financial independence

It is essential for local governments to achieve administrative and financial independence if they are to take full advantage of their own unique assets, and bring new levels of prosperity to their communities. In order to allow local governments to make their own policies and manage their own finances independently and effectively, the central government must proceed with a comprehensive review of tax allocations, apportioning of national subsidy and tax authority to local governments. There is also a need for further discussion on the possible introduction of several large regional states that would have greater autonomy, and the mergers of municipalities to create local jurisdictions that are large enough to be self-sustaining.

(2) Industrial integration and promotion of tourism

As main players in rejuvenation and revitalization of local communities, business corporations are expected to identify potential demand for goods and services among people in the community, and thereby create jobs. There is a need to integrate local industries through partnership with universities, the use of special zones for structural reform, and the promotion of strategic alliances among local companies, in order to take advantage of the strength and diversity of a given region.

Another way to revitalize regional economies is to identify promising tourism resources and entice foreign visitors. Local governments and businesses should work together to draw up plans for the effective use of regional resources, including the natural environment, history, culture and industrial technology, and to construct the infrastructure necessary for tourism.

(3) Efficient construction of social infrastructure and improvement of housing conditions

The national and local governments need to promote the renaissance of urban and local areas through the efficient construction and management of social infrastructure. One way to increase efficiency is to adopt management methods used by private companies. It is also necessary to improve the quality of residential housing and security in order to provide homes where individuals may live positively and creatively. Local governments should aim to build communities that would give residents a sense of comfort and convenience by making use of the information infrastructure.

In addition to the above goals, Nippon Keidanren intends to promote further discussions to build consensus on a vision for Japan's future and national strategies.

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