Shoichiro Toyoda
Chairman
Keidanren
May 26, 1995
Acknowledging this challenging situation, I noted in my New Year's Message, that throughout history the Japanese people have combined their strengths to overcome countless difficulties, such as the oil crisis in 1973, and that we would again meet these new challenges. I also said that we had no reason to regard Japan's future with anxiety. I then announced that Keidanren would make the following five issues its key priorities for 1995:
First, working to achieve a lasting economic recovery; second, strongly advocating the abolition or relaxation of government regulations; third, proposing measures to develop a creative human resources; fourth, expanding private sector communication with the international community; and fifth, advocating the creation of a new socioeconomic system full of energy and creativity.
Keidanren has already begun numerous initiatives to achieve these objectives. Unfortunately, the "Kobe" Earthquake devastated the Hanshin/Awaji region in January; and contributing to Japan's troubles, the yen continued to appreciate, at one point growing to 80 yen to the dollar. Due to these events and a number of other factors, it has become exceedingly difficult to predict Japan's economic future. This General Assembly provides us with an excellent opportunity to examine our problems and renew our resolve to work together to assist the nation in overcoming the difficulties we all face.
In mid-April, in an attempt to deal with this increasingly serious situation, the Government announced its "Emergency Measures for Yen Appreciation and the Economy." This plan outlines specific measures to deal with the over-valued yen and goes on the address problems in the financial services sector and the need to reinvigorate the securities market. The Government's decisiveness in financing necessary initiatives is evident. For example, it has demonstrated its willingness to adopt fiscal policies which require deficit financing. The Government recently approved a supplementary budget for FY 1995, but is must clarify its policies and then implement them rapidly and forcefully.
I recently met with Prime Minister Murayama to discuss methods of reinvigorating the securities market. I told him that in order to achieve this objective and economic recovery, Japan must expand domestic demand and harmonize our securities tax system with international practice -- eliminating both the securities transaction tax and double taxation on dividends. I also emphasized the need for the government to move beyond its limited conventional approach and introduce comprehensive measures which encourage domestic demand. Keidanren will continue to propose other concrete policies to address emerging problems.
Japan is at a critical turning point both domestically and internationally, and the future is difficult to predict. The Japanese people are experiencing a sense of being "under siege," since incomprehensible events are also occurring within our society and have created a growing sense of insecurity. In the post war period we went through a difficult period of reconstruction, then a period of fast growth, and then a period of economic uncertainty due to the oil shocks. Through all our history, once we Japanese arrived at a consensus on action, people in all walks of life concentrated their energies on pursuing our common goal. We have been able to overcome many difficult trials in the past by pulling together.
However, despite our current status as a so-called "economic superpower," supposedly capable taking a leading role in the world, we cannot clearly see the future direction our economy and society should take. This is why the world powers, which have high expectations of Japan, may be disappointed.
I believe that the Government, working with the private sector, must develop a "vision" for the nations' socioeconomic future as we prepare for the 21st century. We will draft own vision and plan for Japan's socioeconomic future that promotes a creative business environment and inspires the younger generation.
He also pointed out specific examples such as deregulation of the aviation and telecommunications industries. I am convinced that deregulation of Japanese business can also set the stage for our next period of economic growth. Comprehensive deregulation can serve as a catalyst that paves the way for development of new industries and businesses which will boost Japan's economy out of the doldrums in which it is now caught.
According to Keidanren estimates, deregulation would increase Japan's real GDP by 177 trillion yen over the next six years, creating 740,000 additional jobs. In addition, it would correct the price differential that exists between Japan and the international community, expand our range of products and services, and raise the national standard of living. It would also increase international access to Japan's market, make the market more transparent and encourage new foreign investment. These developments would also help make our relations with our trading partners more harmonious.
With a view to achieving these ends, Keidanren called for enactment of extensive deregulation legislation last November. In response to our urgings and those of various industries, the Government drew up its "Deregulation Action Plan" and in April, announced its "Emergency Measures for Yen Appreciation and the Economy," reducing the time frame from five to three years and the detailing implementation.
We intend to keep a close watch on how the Government proceeds, to what extent the 1,091 items targeted in the Plan are deregulated, and to ensure that the Plan is implemented aggressively.
We also intend to make recommendations to expand the plan further, by adding regulations targeted to coordinate supply and demand, such as those governing market entry, facility investment and pricing; and, by clarifying items which were poorly defined or were given vague time frames for deregulation. To achieve these objectives, we are fully supporting the activities of Administrative Reform Committee, chaired by Yotaro Iida, which will monitor the Government's progress.
In addressing our infrastructure needs, I believe one very important issue to be addressed is the relocation of the nation's capital. In light of the recent earthquake's devastation and loss of 5,000 lives, we must be mindful of the impact such an earthquake would have on the capital region. Relocating the capital would not only address this concern, but would also serve the critical purpose of rebuilding the nation for the 21st century and boosting domestic demand.
In 1990, the Diet adopted the "Resolution for Relocation of the Capital" and in 1992 enacted the "Law for Relocation of the Capital." I believe that time has now come for action -- the Government must draft concrete plans. It must develop a national land program that offers greater safety and security, and it must begin building a nation in which citizens in every walk of life believe that their ambitions can be realized. Keidanren will strongly advocate that all parties involved decide without delay on the timing and site of the relocation.
Another issue which is essential for many of the same reasons, is the need for priority to be given to the construction of major airports which can serve as international hubs. Keidanren recently issued a report on future airport construction, noting that Singapore, Hong Kong and South Korea are planning large international airports which could serve as new Asian hubs. Since construction has already begun at certain sites, Japan must act quickly to avoid being bypassed by people, goods and information. The Government must scrutinize current public investment allocations designate general fund investments and quickly move forward with new airport construction.
Now let's look at high-tech ventures in the US. In many cases, professors from top universities and experts from high-tech industries are establishing their own independent firms. These new entrepreneurs are at the forefront of technical innovation. But to expand these new businesses and industries and encourage technical innovations, we need human resources prepared to face new challenges. Unfortunately, Japan's present educational and training environment is not equipped to produce a creative human resources with the energy and enthusiasm necessary to explore new frontiers.
In February, Keidanren's Mission to ASEAN countries met with Lee Kuan Yew, former Prime Minister of Singapore. What he told us was most insightful. Businesses such as those in multimedia stand on unexplored ground: That in the past we could look to American or European business models for inspiration, but now we must "blaze our own trails." He also said that bureaucrats who sit behind their desks are no longer effective and in this new age, the business environment must allow individual entrepreneurs to find success, as they do in the US.
Japan's educational system produced workers who were perfect for an age in which our objective was to catch-up to the economies of Europe and North America, but times have changed. We must open up new frontiers. And to succeed, we must first fundamentally reform our school system. Then we must discover new ways for the private sector to adapt to this new environment through emphasizing creative hiring and personnel training systems.
Unfortunately, when the mass media reports on government negotiations between Japan and the US, it mistakenly stresses only the confrontational elements. In actuality, however, Japanese and American firms are forming all kinds of cooperative relationships. I do hope that all other people in both countries who cannot witness this cooperation, will ultimately come to understand the situation better.
In May, I met with members of the Business Round Table and its Chairman, John W. Snow, for a frank discussion. As we have done on a previous occasion in the US last year, we stated the need for our nations to continue their support for global free trade and reaffirmed the extreme importance of US-Japan relations. With our next meeting scheduled for May 1996, we hope that our discussions will act as a bridge to mutual understanding between our nations.
As for the present problems -- the US Government's announcement of sanctions against Japan -- it is my sincere hope that the matter will be settled fairly and calmly at the WTO under international rules.
These visits enable us to see with our own eyes that economic and industrial development are proceeding apace throughout Asia. It also shows us the many problems which remain, particularly the need to construct infrastructure, to transfer technology and to institute human resources training programs. The impression we received was that people throughout Asia are placing much importance on Japan's involvement in their future. We often hear anxiety expressed over the high value of the yen, which is serious issue for other Asian nations as well as Japan, and were told of the need for joint international efforts to stabilize foreign exchange rates.
In all the countries visited, we heard about the high expectations held by our Asian colleagues for the APEC Conference being held in Osaka this coming November. In October, Keidanren intends to organize an APEC Business Congress for private sector economic organizations, which will draft proposals that will be presented to the governments represented at the Osaka Conference. These proposals will address the business communities' views on directions to be taken in liberalizing technology transfers, trade and investment and the steps necessary to implement these directions.
I believe that Japan should show initiative in dealing with such critical issues as environmental problems at every possible venue and forum -- not only at APEC. As Asian countries develop, there will be possibilities of experiencing atmospheric and water pollution problems. Japan's long experience and technological track record in pollution prevention could be of great benefit in ensuring that the pollution that result from economic growth be kept minimum. Japan's contribution would be a great asset in promoting sustainable world growth.
We are now in the midst of many important changes. Keidanren intends to steadfastly adapt to these changes while helping to build a vibrant and creative socioeconomic system. We shall also revitalize our own organization and promote further private sector that advances under the new board of Keidanren. In all our future efforts, I know that we can count on all our members for even greater support and cooperation.
In closing, I would like to express my hope that all of you present today will fully appreciate and support the destiny of our organization. Thank you.