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Executives' Comments  Press Conferences Chairman Sakakibara's Statements and Comments
at His Press Conference

October 11, 2016

Business and Politics

Today's meeting of the Keidanren Chairman and Vice Chairs discussed and approved two documents on politics: Views on Promoting Partnership between Business and Politics, and Evaluation of Major Parties' Policies.

Views on Promoting Partnership between Business and Politics sets out our thoughts on the relationship between Keidanren and politics as well as our ideas on corporate political donations. We have released similar documents each year at this time since I was appointed as Keidanren Chairman in 2014. The basic stance of the document is that we will further promote the partnership with politics to drive action on key domestic and foreign policy issues.

The document also restates the importance of political donations as part of corporate philanthropic activities. Keidanren encourages its member companies to exercise independent judgment in making political donations to parties pursuing policies that will support the healthy development of enterprise in a liberal economy and lead to the revitalization of Japan. It is entirely up to each member to decide whether or not to make political donations, and which party to direct donations to.

Together with Views on Promoting Partnership between Business and Politics, since 2014 we have also compiled an Evaluation of Major Parties' Policies to provide our members with reference material to help them make informed decisions on political donations. This document chiefly examines achievements of the ruling party and issues remaining in light of Keidanren's business policies, to measure progress towards policy goals. This year's evaluation suggests that the ruling coalition led by the Liberal Democratic Party can be highly rated for its achievements and its vigorous pursuit of domestic and foreign policies.

At the same time, our evaluation sets the expectation that the government and the ruling coalition will use their current stable political base as an opportunity to tackle painful reforms head-on, including government expenditure and revenue reform aimed at achieving a positive primary balance by fiscal 2020, reform of social security systems, and drastic regulatory reform.

As I have often stated, the criticism that "money buys policies" is misguided. Properly maintaining a democratic political system entails considerable costs, and companies make political donations as part of their contributions to society. In fact, the business community would not directly derive profits from any of the policies assessed in our evaluation. These policies, including post-earthquake revitalization, building an economy with GDP of 600 trillion yen, promoting science, technology, and innovation, and accelerating economic partnerships, are all national policies aimed at improving the whole of Japan. We evaluate how the government and the ruling coalition have addressed these important issues, and what they have achieved. The notion of channelling profits to the business community has no part in this process.

Japan-Republic of Korea Relations

On October 10 we held our 26th meeting with heads of the Federation of Korean Industries (FKI). Since this meeting has now been held for three consecutive years, participants have built solid networks and relationships of trust, facilitating frank and smooth discussions. This year's meeting addressed (a) expanding economic partnership agreements in Asia, (b) promoting Japan-Korea cooperation in third-country markets, (c) fostering new growth fields, (d) scientific and technological innovation, (e) human resource development, and (f) tourism. On the topic of Japan-Korea cooperation in third-country markets, Japanese and Korean companies should make the most of complementary cooperative relationships utilizing their respective strengths in the fields of infrastructure projects and resource development. Such an approach will enable both sides to generate wider business opportunities, which will in turn contribute to global economic growth. A seminar on this theme will be held in Seoul next spring. On the subject of tourism, the number of visitors moving between the two countries is continuing to grow after a temporary lull, and this trend needs to be further encouraged.

As in the past two years, I met with President Park Guen-hye. In a congenial atmosphere, I reported on our meeting with FKI leaders and made three points of my own. Firstly, I noted that the business communities of Japan and Korea have built a close and mutually beneficial relationship over many years, and that stable and amicable political and diplomatic relations are essential as a platform for further developing this relationship. I expressed my desire for the leaders of both nations to build a relationship where they can visit each other freely as in the past. Bilateral relations are improving, as evidenced by Prime Minister Abe and President Park holding their first bilateral summit in November 2015 and then meeting again in March and May this year.

I also stated our intention to hold a trilateral business summit in conjunction with a Japan-China-Korea leaders' summit if one takes place this year, and invited President Park to attend.

Finally I addressed the topic of economic partnership agreements and conveyed my hope for the early achievement of a comprehensive and high-quality Japan-China-Korea Free Trade Agreement and Regional Comprehensive Economic Partnership in order to promote Japan-Korea cooperation in third-country markets and expand trade and investment. I also assured President Park that the Japanese business community would welcome Korean participation in the Trans-Pacific Partnership (TPP) if such an intention were to be declared. In a meeting with Trade, Industry and Energy Minister Joo Hyunghwan, it was stated that Korea is proceeding with preparations to join TPP and will make an official decision on participation in the near future. If Korea does participate, it will be on the assumption of acceptance of existing TPP rules.

Economic Policy

The passing of the secondary supplementary budget by the extraordinary Diet session today signals the beginning of progress on a substantial portion of the economic policies outlined in the paper titled Economic Measures for Realizing Investment for the Future. We hope such policies will bolster the economy and lead to the end of deflation. However, the funding of some of these economic measures will extend into the regular budget for the next fiscal year. We urge the government to include these items in budget compilation and promptly pass the new budget to ensure that all measures are implemented swiftly.

In the meantime, placing public finances on a sound footing is a prerequisite for revitalization, and this must be achieved by three key measures: economic growth, expenditure reform, and revenue reform. The government should implement this round of economic measures and accelerate economic growth, which is the most important of these three supports. The current economic measures are also crucial from the public finance perspective.

Overproduction in China

When I met with first-ranked Vice Premier of China Zhang Gaoli last month, he stated that structural reforms are proceeding in accordance with the 13th five-year plan, and that these include resolving the issue of overproduction. Excess steel production capacity is said to be around 400 million tons, and rationalization of steel companies is occurring in line with the direction set by the Chinese government. These restructuring efforts raise the issue of dealing with surplus personnel, and Vice Premier Zhang expressed a desire to learn from Japanese companies' experiences and precedents. He appears to recognize the need for initiatives to prevent employment-related social issues.

Japan-Russia Economic Relations

Russia is an important neighbor for Japan in both historical and geographical terms, and it also harbors great economic potential. Prime Minister Abe and President Putin are engaged in dialogue, and Japan has proposed an eight-point plan for cooperation. The business communities in both countries are contributing to discussion of the plan, and are currently finalizing details to ensure a mutually beneficial project. President Putin plans to visit Japan in mid-December, and Keidanren will consider its response with a view to this opportunity.

Paris Agreement

Discussion of basic rule-making under the Paris Agreement will begin at the first session of the Conference of the Parties serving as the Meeting of Parties of the Paris Agreement (CMA1) to be held in conjunction with COP22 in Marrakech. As a party to the agreement, Japan should participate in rule-making from the beginning of the process. A bill calling for approval of the Paris Agreement was cleared by the cabinet today, and I hope that the agreement will be quickly ratified in the current extraordinary Diet session.

Executives' Comments