TOKYO (AP) — Prime Minister Shinzo Abe announced a slew of measures Tuesday aimed at restoring Japan's global competitiveness. Past governments have sought and failed to enact many of the reforms Abe and other leaders say are needed to revamp an outdated post-World War II industrial model and sustain growth for decades to come.
Resource-scarce Japan needs exports and other overseas earnings to pay for imports of fuel and food to feed its 127 million people. While Toyota Motor Corp. is the No. 1 automaker, other big icons of Japan Inc., like Sony Corp., are losing out to rivals like Korea's Samsung Electronics Co.
But rather than a sweeping overhaul, the 230-point plan — dubbed the "third arrow" that Abe promised along with his first two arrows of monetary and fiscal stimulus — is an exhaustive list of potential regulatory changes that must overcome deep-rooted resistance from vested interests to succeed.
Below are the basics of the reform plan:
LABOR: Japan's workforce is shrinking and aging. Abe is promising more childcare to enable more women to work while raising families. He wants to expand programs for migrant worker "trainees" to fill labor shortages in areas such as nursing, elder care and construction and encourage more widespread use of robots. But there is strong resistance to letting more foreigners settle in Japan. Labor is strongly opposed to a proposal to end overtime pay for top white collar workers — a measure critics say might lead companies to force even longer hours on their already overworked employees.
INVESTMENT: Abe wants Japanese corporations to invest more and create more jobs, helping to support growth by creating demand and raising wages. To entice companies to spend a larger share of cash hoards that total some 222 trillion yen ($2.2 trillion), he is promising to cut corporate taxes to below 30 percent from the current rate of over 35 percent, while pushing for stronger governance rules. Since the small and medium-sized companies that employ seven in 10 of all Japanese tend not to pay corporate tax, it is unclear if that will encourage investment or improve profitability for companies struggling to compete. The goal is to restore total capital investment to the 70 trillion yen level it hit in 2007, by 2015.
INNOVATION: Support for research and development could drive growth of cutting-edge medical and biotechnology industries, while Abe has also promised to dismantle many barriers to entrepreneurship. However, the urge to innovate and start up new businesses faces invisible barriers embedded in an educational, employment, social and financial system that strongly discourages risk taking.