As the economy's downtrend persists, concern for the future and a sense of impasse spread among the people, the economy today finds itself in an extremely difficult situation. Drawing on the reserve of national strength that has been developed over the last half century, nevertheless, we must overcome the present crisis, unafraid of changes and ready to demonstrate creativity.
It is urgent to mount an all-out effort to turn the economy around in the near term and present the nation with a hopeful vision of the future. The trends of economic globalization, the falling birthrate and the aging of the population challenge this country to move swiftly ahead with a fundamental reform of the socio-economic system and development of a new infrastructure looking to the next century if we are to have a firm basis for future economic development. Only when this challenge is met, Japan can hope to be in a position to contribute to Asia's economic recovery and the development and stability of the world economy as a whole.
We, of the Japanese business community, take pride in the fact that vigorous and enterprising business operations based on the market principles and self-responsibility are the wellspring of national economic vitality. With that proud awareness, we will manage our businesses and tackle the following priority tasks, seeking to make Japan an attractive country for the 21st century.
Of fundamental importance to putting back the economy on the course of firm recovery is to accomplish structural reform and a revitalized economy powered this time by domestic demand and sustained over the long term. The reform should focus, most of all, on further deregulation to change Japan's existing high-cost structure. In line with the reexamination of the ratio of the direct to indirect taxes in terms of tax revenues, the graduated structure of personal income tax rate as well as the effective corporate tax rate should be adapted to international level. Such a taxation reform is important to provide better incentives for individuals and corporations and fully exploit their potential capabilities.
In the immediate term, it is urgent to resolve the nonperforming loan problem and take swift steps to reform the financial system in order to restore its normal functions. Also important are measures to regain fluidity in the property market, promote utilization of idle land holdings and encourage residential construction.
Responding to such policies, the business community will endeavor to start new industries and businesses and increase employment.
Changes are accelerating in the form of economic globalization, the increasing spread and sophistication of information technology, the falling birthrate and the aging of society. These demand that we develop a fitting infrastructure in terms of both hard and software. There is the need to improve social capital in an efficient and prioritized manner, particularly in relation to information-communications, physical distribution, environment, social welfare and housing. The business community, acting on its independent judgments, will participate in the so-called PFI projects which are intended to make use of private sector resources.
As a nation that puts a premium on technology development, Japan must keep up and enhance its research and development capabilities and nurture scientists and engineers as creative as anybody in the world. For this purpose, it is necessary to review the government's science and technology policies and go ahead with educational reform to meet the changing requirements of the times. Businesses, too, must make improved arrangements to better encourage creative contribution by individual workers. Reform efforts are also called for in the field of social security, the most basic underpinning of the people's lives, so that a more transparent and sustainable system may be put in place.
Releasing the vital strength of private industry in an unfettered marketplace is basic to Japan's future development. While guaranteeing freer business activities through deregulation in the private sector, the administrative reform should be accelerated in the public sector to put the market forces at work and promote the new entry of private businesses and privatization of government enterprises. Simultaneously, rapid progress toward smaller government should be sought at the center as well as in the local regions through the reorganization of the central government ministries and agencies and integration of local administration into wider regional units. Also, an early action should be taken to put into effect the proposed relocation of the core functions of the capital from Tokyo; the project could serve as the symbolic focus of national renewal and as an opportunity to lift the people's confidence in the future. There is also the need for further regional development with the emphasis on preserving the characteristics of different local communities as well as for the redevelopment of Tokyo.
In meeting the problems of the environment, it is essential that industry, the government, the general public, local interest groups, and non-governmental organizations work closely together. Keidanren already has announced its "Voluntary Action Plan on the Environment" (1997) which is based on the "Keidanren Global Environment Charter" (1991) and "Keidanren Appeal on the Environment" (1996). In conformity with the voluntary action plan, we will exert efforts to develop a resources-recycling society geared to energy and resources conservation and thereby to the conservation of the global environment. The members of Keidanren will also strengthen their activities for protection of the nature from the standpoint of preserving the ecological system.
Japan must contribute to the development of the world economy through maintaining and strengthening the liberal trading system and expanding international trade and investment. In Asia where difficulties are being experienced today, this country has a particularly important role to play in bringing about regional economic recovery. For this purpose, it must revitalize its own economy, thereby increasing imports from the region, and cooperate with those countries in the training of personnel and developing supporting industries. Another task for Japan is found in the area of improving regional currency stability. This requires promoting so-called internationalization of the yen as both a payment and reserve currency. To this end, steps, such as improvement of the short-term funds market, need to be taken to make the Japanese financial market more open to international transactions.
We, in the business community, will actively pursue private-level diplomacy so that a better mutual understanding will be developed with leaders of other countries. Another objective for the private-level diplomacy is to seek a better appreciation of our views by major international institutions such as the WTO, OECD, APEC and World Bank.
As Japan proceeds with the reform of its socio-economic system, businesses as a social institution bear an extremely important responsibility. Mindful of the importance of upholding high standards of corporate ethics and governance, the members of this federation are resolved to regain public trust at home and abroad by enhancing the efficiency and transparency of business activities and adhering to Keidanren Charter for Good Business Behavior.