- New LDP President Takaichi
- Views on Closer Cooperation with the Political Establishment and Policy Evaluation of the Major Political Parties
- WTO Reforms
New LDP President Takaichi
I welcome the appointment of Mrs. Sanae Takaichi as the new president of the Liberal Democratic Party.
Having held a succession of key offices, including minister for internal affairs and communications and minister in charge of economic security, Mrs. Takaichi has garnered extensive knowledge and experience of diplomacy and economics and a number of other policy fields over her political career. I hope that as the LDP's first female president she will bring these skills into full play in efforts to regenerate the LDP and follow through on her policies.
It is my understanding that Mrs. Takaichi's policies are also consistent with those advocated by Keidanren, which include achieving a strong economy through growth investment, striving to make Japan a leading power in the field of technology by pursuing strategic support that contributes to enhance the ability of Japan's industry to compete internationally and to develop human resources, easing regulations on working hours with a view to accommodating workers' choices, and reinvigorating local economy and industry through the formation of regional industrial clusters across Japan. Keidanren will work together with the new LDP president to resolve the various issues.
(In response to a question regarding the economic policies set out by Mrs. Takaichi) She speaks of "creating a strong economy," and I sense her firm determination to do so.
Actively investing in economic security, food security, energy and other growth sectors will also help contribute toward achieving the goals defined by the Keidanren of making Japan a leading power in the fields of science and technology and raising the growth potential of Japan's economy.
I would like to see the government improve the potential for the private sector to anticipate future developments, by formulating a mid- to long-term plan to facilitate investment and in turn increase the growth potential of Japan's economy. I hope that the business community will also act in concert with these efforts, and at the same time work on actively expanding private-sector investment, in particular domestic investment.
(In response to a question regarding the refundable tax credits that Mrs. Takaichi seeks to implement) Refundable tax credits are one powerful means of pursuing efficient and effective distribution with a view to achieving a virtuous cycle of growth and distribution and the formation of an ample middle class. I will closely observe the discussion regarding the scale, specific fiscal resources, and other such aspects of such a system.
In order to ensure efficient and effective refunds, it is essential to accurately ascertain the taxable capacity of each individual in terms of income and assets. It is therefore important to expand the utilization of the Individual Number System ("My Number" system), such as making it mandatory to link one's individual number with a bank account or other data sources.
(In response to a question about the balance between fiscal discipline and the active fiscal stimulus advocated by Mrs. Takaichi) The proactive investment approach overlaps in many respects with the policies advocated by Keidanren. While investment is essentially the task of private-sector companies, the government needs to, while recognizing the necessity for wise spending, actively and intensively channel resources into areas that require government investment and drive, such as with an extremely long timeframe.
Mrs. Takaichi has pledged "responsible expansionary fiscal policy." She appears determined to strike a balance between an expansionary fiscal policy and fiscal consolidation, and Keidanren will also place importance on such a balance.
(In response to a question regarding the realization of wage increases and government policy on wage increases, in light of the fact that during the LDP presidential election Mrs. Takaichi responded to a fellow candidate advocating wage increases as a government policy target with the statement that "conducting wage increases is a matter for private-sector companies") I think that the fact that there was a candidate who advocated wage increases as a policy target can be attributed to the extremely high anticipation from society for wage increases. The rising momentum behind the call for society as a whole to break the stagnation that has held back wage increases for many years seems to have prompted recognition of the importance of the government taking the lead on this matter. This does not, however, alter the fact that wages are ultimately to be decided by each company independently on the basis of their individual circumstances and other such factors.
Keidanren believes that it is necessary to start with wage increases in order to set a virtuous cycle of growth and distribution in motion. Keidanren therefore classes wage increases as a "social obligation" and will strive to ensure that the strong momentum in wage increases is sustained and takes lasting root.
Support provided by the government must be aimed at developing an environment in which particularly small and medium-sized enterprises are able to secure a stable source of capital, thereby ensuring that wage increases can be made on an ongoing basis. This assistance needs to be provided in such a way that encourages management to engage in autonomous efforts toward wage increases as opposed to settling for an easy option.
(In response to a question regarding measures to support companies temporarily in deficit due to external and other factors) One possible means of support, for example, could be to encourage greater use of the mechanism incorporated in the tax scheme for the facilitation of wage increases which allows tax deductions to be carried over. If said tax scheme is not user friendly, it is also important that revisions be made to ensure that it is easier to utilize.
(In response to being asked the Chairman's assessment of Mrs. Takaichi's announcement of an increase in subsidies for local government bodies with a view to facilitating wage increases by small businesses and small and medium-sized enterprises in deficit that are unable to make use of the tax scheme for the facilitation of wage increases) I am unable to make an assessment because I am not aware of the scale and the actual process by which support reaches companies in deficit. I would like to take a close look at how the scheme will be constructed, as it is important for support to reach companies in deficit in such a way that truly encourages proactive efforts by management.
(In response to a question seeking the Chairman's view on the Nikkei average hitting a new record high, and the yen depreciating as far as a rate of over 150 yen to the US dollar) The market movements are as anticipated. We must remain dispassionate toward the daily shifts in the market, and a correction phase will surely come sooner or later, but particularly in the case of stock prices, I believe that anticipation toward the new government administration from investors, including those from overseas, is prompting the current developments in the market.
(In response to a question asking the Chairman's views on a statement from Mrs. Takaichi hinting at a possible revision of the 2013 joint statement of the government and the Bank of Japan and his opinion on the direction of monetary policy) I think that the joint declaration will be reviewed if it is necessary. However, surely the target of stabilizing the rise in commodity prices at 2% should not be removed from the joint declaration, given that, while inflation of 2% has been achieved in the last few years, another reverse turn could occur.
It is extremely important for the government and the Bank of Japan to remain in close communication regarding monetary policies, and for the Bank of Japan to engage in dialogue with the market and make objective decisions on policies on that basis. The process of normalizing monetary policy is currently in progress, and I believe that sense of direction will remain unchanged.
(In response to a question on diplomacy with China and the Republic of Korea) Mrs. Takaichi has demonstrated a realistic stance in the statements she has made in debates during the LDP presidential election and on other occasions. She has said, for instance, that she will prioritize dialogue and pursue balanced diplomacy. I believe that she will adopt a realistic approach to diplomacy going forward.
(In response to a question regarding the adoption of a system allowing married couples to choose separate surnames) Keidanren believes that introducing a system allowing married couples to choose separate surnames is necessary from the point of view of efforts to facilitate the active engagement of women in professional society. I believe that Mrs. Takaichi shares this fundamental commitment to promoting women's active engagement in professional society.
Keidanren will continually engage in calm and constructive dialogue with the party in office as we carefully listen to and share the opinions of companies and their employees. We will also pursue earnest debates on the bills that have already been submitted to the Diet by each party.
(In response to a question on what the Chairman sees as the tasks ahead for Japan now that Mrs. Takaichi has been appointed LDP president) I inherited "FUTURE DESIGN 2040," the vision compiled by my predecessor Chairman Tokura, with the goal of actively ensuring its development and implementation. The top priority is therefore to formulate a road map for achieving that vision and to commence the process of putting it into practice.
With that in mind, I would like Mrs. Takaichi to steadily push forward with policies that increase Japan's growth potential and help to achieve the vision of Japan as a leading scientific and technological power and a leading trade and investment power. As political stability will be needed to do so, I would like her to explore the possibility of an expanded coalition. Moreover, because a minority ruling party is typically perceived by markets as having an expansionary fiscal approach, there is some need to broadcast efforts toward mid- to long-term fiscal consolidation, and it is also important to continue to secure overseas acceptance of Japan's public finances.
Views on Closer Cooperation with the Political Establishment and Policy Evaluation of the Major Political Parties
In order to work toward solving the many important issues, as part of our efforts to ensure policy-oriented politics, Keidanren has compiled this year's edition of its views on closer cooperation with the political establishment, which detail our relationship with the political establishment and stance on political donations. We have also formulated our policy evaluation of the major political parties and published it today as a reference for member companies preparing to make political donations.
(In response to a question regarding the fact that, as was the case over the previous 11 years, Keidanren once again highly rated the policies of the LDP this year, despite the Japanese economy being stagnant and no improvement being seen in the daily living standards of Japanese citizens) Since 2014, we have annually reviewed the current initiatives and results of the major parties in the context of Keidanren's own business policies. As I understand, the LDP has pursued policies that share a common direction with the policies advocated by Keidanren and has steadily achieved one result after another.
Looking at the long-term on the other hand, the last 10 years or so were part of a period known as "the lost 30 years." Since my appointment as Keidanren chairman, I have also personally recognized the importance of the medium- and long-term perspective and the perspective of Japan in the world, and I would like to see those in politics, the LDP in particular, work toward solutions to the many mid- to long-term challenges under strong leadership. The business community will likewise adopt a mid- to long-term perspective and continue to engage in efforts to tackle the tasks of both strengthening Japan's ability to compete in the field of industry and solving the challenges facing society.
(In response to being asked if Keidanren has no intention to stop calling for political donations, despite the LDP's political funding issues) I believe that politics should be policy-oriented and focused on the sound development of parliamentary democracy. I think that it is companies' role in society to recognize this as their great cause and use their position to do what they can to support it.
Properly sustaining a democracy incurs considerable costs. For our political parties the primary sources of funds are membership fees from those who join them as party members because they share their principles, and income from the party's business activities. In addition to this, the parties also hope to receive voluntary donations from private-sector companies.
It should therefore be recognized that companies make political donations based on an entirely voluntary decision. While we need to sincerely accept the argument that politics has not adequately solved the mid- to long-term issues, there will be no change to our approach of encouraging political donations to political parties that pursue policies that contribute to the healthy development of companies in a free-market economy and to improving standards of living for the Japanese public.
Keidanren will continue to urge those in politics to ensure further transparency in political funding and stronger party governance, which are a prerequisite.
WTO Reforms
(In response to a question on the problems currently faced by the WTO and what kinds of reforms will be called for by the WTO mission this month) The WTO continues to hold an important role given that common rules should be applied across the world in order to rebuild a free and open international economic order. On the other hand, I am aware that the WTO is not performing its role sufficiently.
The current WTO appears to have three issues: the fact that decision-making can be blocked by just one country, that it has failed to respond to new challenges in the fields of sustainability and digital technology, and that the rules that have been determined are not complied. The WTO needs to undergo reform, with the ultimate goal of reforms being to create a WTO 2.0.
At the B7 Tokyo Summit in 2023 we proposed a "Free and Fair Trade and Investment Club" as the course for achieving a WTO 2.0. The club would consist of fellow countries who commit to high-level trade and investment criteria including the elimination of tariffs on mineral and industrial goods and the prohibition of market-distorting subsidies.
While we recognize that it is a difficult task, we will lobby the WTO to support this approach, such that the club serves as a catalyst attracting more member countries and regions for the club itself and in turn contributing to the creation of a WTO 2.0.