- Middle East Situation
- Trump Tariffs
- Integrated Reform of Tax, Fiscal Policy, and Social Security
- Companies Act Amendment
- Corporate Governance Code Revision
- Rising Long-Term Interest Rates
Middle East Situation
(In response to a question, amid reports that Iran is imposing transit fees on vessels passing through the Strait of Hormuz, about whether Japan should negotiate individually with Iran on the transit fees) First and foremost, the government's efforts to pursue international coordination and all available diplomatic channels toward an early de-escalation are to be commended. At the online foreign ministers' meeting on the Strait of Hormuz, attended by more than 40 countries, it is understood that the chair's statement was issued by the United Kingdom, including rejection of the transit fees and consideration of economic sanctions.
That said, Japan, which is particularly dependent on energy supplies routed through the Strait of Hormuz, urgently needs the Strait to be reopened as soon as possible. Given that multiple vessels, including those of Mitsui O.S.K. Lines, have already been confirmed to have passed through the Strait, it may be worth considering, as one option, having Japan take the lead in coordinating with Asian nations and engaging Iran through diplomatic negotiations, while remaining firmly grounded in international cooperation.
Regarding the transit fees, freedom of navigation is a fundamental principle. While I am not aware whether transit fees were imposed on the Mitsui O.S.K. Lines vessels on this occasion, Japan should continue to pursue freedom of navigation as its guiding objective.
(In response to a question about the need to establish a system for prioritizing supply to critical sectors such as healthcare in response to concerns over crude oil and naphtha supply) At present, it is understood that there are no disruptions to domestic crude oil and naphtha supply, thanks to the release of reserves, utilization of existing inventories, and alternative procurement from sources outside the Middle East. However, if the de facto blockade of the Strait of Hormuz is prolonged, this could have a serious impact on stable supply, which is a matter of grave concern. At today's meeting of the Chairman and Vice Chairs, very lively discussions took place, and each Vice Chair expressed a strong sense of urgency over the potential for a prolonged situation. Accordingly, there is a need to begin considering the next steps with the possibility of prolonged supply disruption in mind. In the case of naphtha, the supply chain is extremely complex, and the impact could ripple widely to everyday consumer goods. An urgent, comprehensive consideration is needed, beginning with an early assessment of the situation, followed by a determination of what measures are required on both the supply and demand sides, including whether to go so far as to establish a system for prioritizing supply to critical sectors.
(In response to a question about the need for oil conservation) The Middle East situation is growing increasingly tense by the day. President Trump's speech on April 2 was extremely harsh in tone. We are deeply concerned about the situation. The government's efforts to ensure a stable oil supply, including releasing reserves and securing alternative procurement sources, are to be commended.
While there is still adequate capacity in oil reserves at present, it is important to conduct a comprehensive consideration about both the supply and demand sides urgently, with a prolonged situation in mind, while that capacity remains. In considering demand-side restraint measures, the macroeconomic impact must naturally be taken into account. The business community is also determined to advise the government on necessary responses regarding energy conservation and electricity savings and so on, and to cooperate in implementing them. On the other hand, the very consideration of demand-side restraint measures could significantly affect public sentiment, making a thorough assessment essential. To avoid confusion and encourage a measured response, messaging should be carefully framed with the aim of providing reassurance.
I will not go into specifics about what forms of conservation might be considered, but it is necessary to thoroughly examine the substance of measures on both the supply and demand sides, as well as the conditions and targets for their implementation, taking into account the measures outlined by the International Energy Agency (IEA) while also considering Japan's particular circumstances.
(In response to a question about whether the government has consulted with or sought input from the business community regarding the implementation of conservation measures) Not at this point.
(In response to a question about the anticipated timeframe before prolonged disruptions would significantly affect the supply of oil and other products) At today's meeting of the Chairman and Vice Chairs, there were no specific opinions or requests regarding the timeframe. This depends on a range of factors, including the number of days of product inventory held by individual companies, as well as the industry and the types of products involved. From a consumer perspective, some analysis is needed to determine what specific product categories in areas such as clothing, food, and housing would be affected, and over what timeframe. While precise analysis by sector is difficult, the level of conservation to be requested should be determined based on a broad-brush analysis.
(In response to a question about whether the business community is considering issuing a statement expressing concern over a prolonged situation) I am approaching today's press conference on the understanding that my remarks here are the most important form of communication at this point. If and when a more impactful message from Keidanren as a whole becomes necessary, issuing a formal statement may be warranted.
(In response to a question about the government's position that oil reserves are currently sufficient and that it is not yet time to ask the public to conserve) The priority should be messaging that avoids excessively spreading concern about a potential crisis if the situation is prolonged, and that prevents unnecessary confusion among businesses and the public. We understand the government shares this view.
That said, the government naturally also recognizes the importance of developing a comprehensive crisis response plan while reserves are still adequate, in case the situation is prolonged. From the standpoint of those involved in the real economy, there is a tangible sense that energy and raw material supplies could be cut off, forcing production cuts and potentially leaving consumers without adequate products. It is precisely this awareness that compels us to speak out now.Trump Tariffs
(In response to a question, more than a year after President Trump's announcement of reciprocal tariffs, about the impact of the Trump tariffs on the Japanese economy and the effect of new tariffs on pharmaceuticals and their raw materials) Due to President Trump's tariffs, it has been a year of significantly heightened uncertainty, with reduced predictability for corporate investment decisions. At the macro level, some estimates put the impact on the Japanese economy at negative 0.2 percent, giving the impression that the effect has been more limited than initially feared. This is likely because companies absorbed the increased tariff burden within their supply chains through their own management efforts, thereby easing the downward pressure on demand. In addition, the Japan-U.S. agreement brought tariff rates down from the levels originally set by the United States, which also helped mitigate the impact.
On the other hand, some companies have passed on costs through price increases, while others have been forced to restructure their supply chains. At the micro level, a considerable number of companies have been significantly affected.
Regarding tariffs on pharmaceuticals, the Japan-U.S. tariff agreement reached last summer included provisions to ensure that Japan would not be placed at a disadvantage relative to other countries. The newly announced pharmaceutical tariffs are consistent with that agreement. However, pharmaceuticals have historically been subject to zero tariffs worldwide, and the impact of these measures on patient access to medications must be monitored closely. In addition, there is a need to pay close attention to the impact on Japan's pharmaceutical industry, which has invested in the United States over many years and contributed to the stable supply of pharmaceuticals.
Integrated Reform of Tax, Fiscal Policy, and Social Security
(In response to a question about views on refundable tax credits and a two-year consumption tax cut on food, and whether these will be reflected in the forthcoming proposal on integrated reform of tax, fiscal policy, and social security) In recent years, as the momentum for wage increases has been building, the effect of those increases has, in our view, been somewhat offset by the burden of social insurance premiums. Accordingly, with respect to refundable tax credits, it would be desirable to consider providing benefits equivalent to a portion of the social insurance premiums borne by middle- and low-income earners, as a means of reducing the effective burden on the working-age population. We have been expressing our views from that perspective at the expert panel of the National Council on Social Security. To bring this to fruition, making full use of the My Number system is also important from the standpoint of assessing each individual's ability to bear costs.
Ideally, the development of an infrastructure for linking data on income, social insurance premiums, tax burdens, and benefits would be necessary, but since this would require considerable time, it would be entirely worth considering introducing a simplified benefits mechanism at first, and then refining the system in stages, while proceeding with developing the infrastructure.
In this way, Keidanren has positioned refundable tax credits as something to be actively promoted.
Regarding a consumption tax cut, the National Council should conduct thorough deliberations, fully taking into account that the consumption tax has historically been positioned as an important and stable revenue source underpinning the social security system. When considering a consumption tax cut, identifying alternative revenue sources is absolutely necessary in order to maintain market confidence and ensure the sustainability of the social security system. This position has been communicated through hearings and other proceedings of the working-level meetings of the National Council. Naturally, these views will also be incorporated into the forthcoming proposal on integrated reform of tax, fiscal policy, and social security.
(In response to a question about the sequencing of the government's proposal for a two-year consumption tax cut on food and beverages as a bridge until the introduction of a refundable tax credit system) It is understood that a strong consensus is forming at the expert panel of the National Council on the need for refundable tax credits. This opportunity should not be missed, and work should begin immediately on introducing the system. Going further, I believe it is necessary to introduce a simplified format in under two years. We understand that the working-level meetings are currently deliberating on the consumption tax cut in the context of these considerations.
Companies Act Amendment
(In response to a question about the evaluation of the interim draft proposal by the Legislative Council for the amendment of the Companies Act, published on April 2) Overall, this is viewed as an effort to consider amendments that will contribute to corporate growth as part of a broader growth strategy. For example, a proposal is under consideration to eliminate the requirement that shareholders must hold 300 or more voting rights in order to exercise their shareholder proposal rights. In recent years, investment units have been reduced in size, and there has been an increase in shareholder proposals with virtually no prospect of being approved. As called for in Keidanren's proposal Toward Corporate Governance for Sustainable Growth (published in December 2025), the elimination of the 300-voting-right threshold is a welcome development for the proper functioning of shareholders' meetings. Going forward, Keidanren intends to submit its views through the public comment process on the interim draft proposal.
Corporate Governance Code Revision
(In response to a question about the proposed revisions presented to the Financial Services Agency's Expert Panel on the Revision of the Corporate Governance Code, including views on the Interpretive Guidance to be newly introduced and the inclusion of provisions on cash and deposits) Overall, the revisions are aimed at steering companies toward growth investment, that is, toward a transition to an investment-driven economy. This is the intent behind the Code revision, we support the proposed revisions broadly.
The Interpretive Guidance is not subject to the comply-or-explain framework; rather, it sets out the underlying rationale and purpose of each principle, as well as reference best practices. As such, the Interpretive Guidance serves a supporting role in facilitating substantive compliance with each principle, and provided that a company's approach is consistent with the intent and spirit of the Principles, the specific means of implementation are left to each company's discretion. In this sense, the Interpretive Guidance is consistent with the view that it is important for companies to pursue governance reform through their own autonomous initiatives and ingenuity.
Regarding cash and deposits, a range of opinions have been expressed in recent years from the perspective of retained earnings, but having a large amount of cash and deposits is not inherently problematic. What matters is capital allocation: how a company distributes its diverse management resources, including cash and deposits. This is fundamentally a matter that should be left to each company's managerial judgment. Companies should continually assess whether their management resources as a whole, not just cash and deposits, are being effectively deployed toward growth investments and other purposes. The allocation of management resources is, in essence, corporate strategy. In terms of allocation, investment, returns to employees, and retained earnings as a buffer against risk events all serve important roles. It is therefore important to approach this as an assessment of the allocation of management resources as a whole.
Rising Long-Term Interest Rates
(In response to a question about the sharp rise in the yield on 10-year Japanese government bonds, a key benchmark for long-term interest rates, which exceeded 2.4 percent today) Since tensions in the Middle East escalated, extremely high volatility has persisted. Behind this are not only genuine demand factors but also likely the activity of short-term, highly speculative funds. However, countries that depend on foreign resources have all experienced broadly similar movements in both interest rates and exchange rates, and Japan's movements should be understood as part of this wider pattern. Going forward, as the Takaichi administration's policy of responsible and proactive fiscal policy seeks to gain the confidence of the markets, movements in interest rates will require particularly close attention.
While there is considerable debate over the level of the neutral interest rate, given the current level of real interest rates, the Bank of Japan's normalization path should be maintained.