Overcoming the present economic crisis as soon as possible remains the most urgent agenda item to be tackled this year. We must also accelerate the pace of structural reforms and strengthen the industrial base so that a solid platform for economic development can be built toward the next century, which is only two years away. Japan's recovery is essential for an economic revival in Asia and is indispensable to the stable development of the world economy as well. Japan has a responsibility to the rest of the world to turn around its own economy.
Strong political leadership must be exerted to put bold policies into practice swiftly and decisively to meet these challenges. Businesses should conduct their operations in a fair and transparent manner. True to the principles of "independence, self-help and self-accountability", they must also make themselves even more competitive by accelerating technology development and fortifying corporate management. These efforts, combined with a vigorous demonstration of entrepreneurship, will contribute to revitalizing the Japanese economy.
From these perspectives, we at Keidanren strive to see the following implemented and will work with our corporate members to make full use of the government measures that are taken.
The government, with both speed and steadfastness, should put into effect its programs for economic revival that have been already adopted. Particularly important will be to continuously apply fiscal measures to stimulate demand. Meanwhile, financial institutions must enrich their capital to recoup liquidity. The financial standing of corporations has to be improved, and excess capacity should be rectified. The combined effect of these efforts by the government and private sector is likely to lift the Japanese economy out of the prolonged slump and return it to a growth rate of about 2 percent in the latter half of the coming fiscal year.
In the coming years, Japanese society will increasingly feel the impact of economic globalization and its own demographic changes -- a falling birthrate and the aging of the population. We must respond to these challenges by stepping up the pace of structural reforms to revitalize our economic system. It is important to present to the people a credible vision of where the proposed reforms will lead them and dispel their anxiety about the future. Administrative and fiscal reforms and greater use of information technology are necessary to bring about a smaller and more efficient and transparent government at both the national and local levels. Another priority item on the reform agenda is to further ease individual and corporate tax rates and to rectify other aspects of the existing taxation system. Still another is to restructure the present social security system into a sustainable one that the people can feel confident about relying on.
Whether the Japanese economy can resume sustained and stable economic growth in the next century hinges on continual improvement of the industrial infrastructure, especially that affecting the competitiveness of the manufacturing sector. The problem of the so-called high cost structure in this country needs to be addressed through continued deregulation, prioritized infrastructure improvement for physical distribution and so on. The government should establish a "strategy council on industrial competitiveness" to develop comprehensive measures.
A strategic industrial-technology policy should also be formulated. In distributing government resources like investment outlays on research and development, priority should be given to high-technology sectors, including telecommunications, environment, biotechnology, and new materials to create a more value-added industrial structure.
There are strong international expectations that Japan will contribute to the stable development of the world economy and, inter alia, the recovery of Asian economies. Japan can best meet these expectations by turning around its own economy rapidly. Taking a medium- or longer-term view, Japanese businesses will carry on with their investment activities in Asia and actively cooperate in local personnel training and development of the so-called supporting industries.
As we believe that the world needs a more stable and stronger financial and currency system, we welcome the introduction of the euro, and will lend further efforts toward the use of the yen as an international currency.