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Do athwart the Koizumi Reform

- No reform without business recovery-

Cat: ECO
Pub: 2002
#: 0303b

Uichiro Niwa (丹羽宇一郎)



Do athwart the Koizumi Reform


No reform without business recovery 景気回復なくして改革なし
Uichiro Niwa 丹羽宇一郎

Jul. 2003

  1. Prologue:
  2. Reform is impossible without economic recovery:
  3. Large-bonded mouth, small-boned feet:
  4. More investment in human resources:<
  5. Revise the National Public Service Law:
  6. More Self-help efforts of private companies:
  7. Specific remedy for deflation:
  1. プロローグ:
  2. 景気回復なくして改革なし:
  3. 口は骨太、足は小骨:
  4. モノよりヒトへの投資:
  5. 国家公務員法の改正を:
  6. 企業側の自助努力:
  7. デフレ下の特効薬:
  • Mr. U. Niwa's critique against the Koizumi economic policy is the vox popli and vox mercatus.
  • 小泉経済改革に対する丹羽社長の批判は、民の声であり市場の声である。

>Top 0. Prologue:

  • Mr. Uichiro Niwa, president of Itochu Corp., one of the major trading companies published an article at "Bungei-Shunju", a major monthly journal in japan at its July 2003 edition; straightly criticizing the present Koizumi economic policy. He asserted rather reverse policy of the present Koizumi's reform plan was urged.
  • It looks quite rare case in Japan that one of the typical business leaders to make a clear voice against the incumbent political authority.
  • But this indicates seriousness of the rocale of Japanse economic front side.

0. プロローグ:

  • 文藝春秋2003年7月号、伊藤忠商事丹羽宇一郎社長が時の内閣の政策を正面から批判した記事が掲載された。「小泉改革の逆をやるしかない。」と。
  • これは希有な出来事である。それは日本では大企業のリーダーが時の政権の政策を正面から文書で批判することは極めて稀だからである。
  • しかしそれは経済の現場からの悲痛な叫びであることを示している。

>Top 1. Reform is impossible without recovery:

  • Cycles of deflation:
    Acceleration of the treatment of bad loans causes more "selling" pressure in the market; again provoking further depreciation of assets, promoting more progress of deflation, then arouse more bad loans. Now there will be shrinking of "buying" power, which would cause more deflation, and so on.
  • Political deflation:
    The essence of Koizumi cabinet since two years ago has been: 1) reconstruction of the public finance and 2) process of the bad loans. Premier Koizumi prepared the only prescription of the monetary policy, quantitatively increasing money supply through the Bank of Japan.
    • The balance of the current account of the banks amounting about 5 trillion yen now have increased around 27 trillion yen as of April 2003.
      (Cf: If yen 120= $1 is supposed, 1 trillion yen is about $8.3 billion)
    • But there appears no improvement from the deflation in the economy at the moment, causing a choking of money flow due to dysfunction of the financial system.
    • A serious of Koizumi's policies have caused institutional selling pressure; which I dare to say, "political deflation."
  • Four economic policies promoted by Koizumi:
    1. To strengthen "Capital Adequacy Ratio" of banks:
      Lower capital adequacy ratio banks are obliged to compress the total asset which is a denominator of the ratio. This means such banks tend to sell their asset and securities in order to decrease bank loans.
    2. To cancel cross-holding of shares by banks:
      First, US banks have little such cross-holding shares. Meanwhile, Japanese banks have kept such cross-holding as a means of guaranteeing their loans as well as controling measures of management of the loaned companies.
    3. Current Value Accounting System:
      The balance sheets of corporations have deteriorated by the market price of the specific date; such assets have been held for a long time as the companies' strategic viewpoint. The system has such background that:
      • UK considered this system in the latter of 1980s in its prosperous market, as a measure to evaluate inflationary factors in BS. But Germany and France postponed induction of this system. And even UK herself postponed this system, too, I believe.
      • All of present Japanese corporations earned 28 trillion yen as the ordinary profit basis, but have lost 33 trillion yen due to devaluation applied by this system.
      • But this system can be applicable only to the short-term operation of assets such as bank deposit and stock of merchandise.
    4. Assessment by Financial Service Agency, particularly focusing financial situation. This caused further withdrawal of finance, especially from SMB companies.
      • SMB should be evaluated not only by their financial statement but also quality of management and staff, level of retained technology, and their heredity. The present situation could be called as "short of money under affluent money supply."
      • Japanese government injected public fund into Risona Bank amounting 2 trillion yen, but whose recovery would be questionable.
  • Timing is essential:
    Though the economic policy may be correct in theory, bu the timing is important; it may cause even adverse effect and may destroy the real economy. Thus the balance of policy is important with careful attention to not only selling pressure but also buying measures.

1. 景気回復なくして改革なし:

  • 悪循環:
  • 政策的デフレ:
    • 2001年3月以来、日銀に開設している銀行の当座預金残高:5兆円→27兆円/2003.4
    • しかしデフレ一向に改善していない。金融システムの機能不全による資金の目詰まり状態である。
    • 一連の政策によって制度的「売り」圧力が発生した。これは"政策的デフレ"というべき状態。
  • 小泉内閣の4つの経済政策:
    1. 銀行の自己資本比率規制強化:
    2. 銀行による持ち合い株式保有解消の推進:
    3. 時価会計制度:
      • 1980年代後半、好況の英国でインフラ会計論の中で検討。
      • 現在、日本の全法人の経常利益28兆円、資産評価減33兆円の事態発生。
      • 預金・製品など短期運用資産についての時価会計は必要。
    4. 金融庁による財務状況中心の査定
      • 中小企業の評価は、財務状況だけでなく、経営者、人材、技術力、伝統も視野に入れるべき。「金余りの金詰まり」
      • りそな銀行 (公的資金2兆円注入) の収益力改善は疑問。
  • タイミングが重要:

>Top 2. Large-boned mouth, small-boned feet:

  • Patchwork:
    Koizumi cabinet appeals "the large-boned reform," but which seems rather patchwork policy like adhesive tape, because it has not yet achieved satisfactory results.
  • Bold tax reform is urged:
    1. to reduce consumption tax: now at first 1 -3 %, but in future it must be raised to 5, or 7%, and then 15% after eight years, provided however lower rate is applied for daily necessities, while higher rate for luxuries.
    2. to freeze double taxes for shares (corporate tax and private income tax) for a certain period.
    3. to freeze inheritance tax for one year:
      exempt from inheritance tax for stocks and land but tax cash. In Canada and Australia there is no such inheritance tax, and in US it is scheduled to abolish gradually toward 2020. In Italy, inheritance tax to linear relation became zero since Sept. 2002.
    4. Corporate tax of 39.54% belongs to still higher level among the advanced countries, which should be lowered.
    5. to exempt from inheritance tax of their stocks in case of SMB, same as the case of present exemption of inheritance of farm.
    6. to exemt taxes on the ssets of SMB operating no less than a decade.

  • These reforms might be criticized as favorable policies only for the rich, but if the successors sell the inherited properties, which will be imposed.
  • These policies are also effective to activate privately owned 40 trillion yen of hoarded cash in Japan.

2. 口は骨太、足は小骨:

  • パッチワーク:
  • 大胆な税制改革
    1. 消費税減税:まず1-3%とする。
    2. 株式二重課税 (企業の法人税と個人の所得税) を一定期間凍結する。
    3. 相続税1年凍結する。
    4. 法人税39.54%は、先進国中でも高い水準ゆえ減税する。
    5. 農地なみの無税相続を中小企業にも拡張する。
    6. 10年以上も事業を続けている中小企業の資産は無税にする。
  • これらは金持ち優遇税制という批判があるかもしれないが、相続した人が売る時は課税するのである。
  • これらは日本の個人のタンス預金40兆円を使いたくなる政策である。

>Top 3. More investment in human resources:

  • Essencially, administrative reform shouild be national structural reform.
  • To cease to overconcentration in Tokyo area:
    Promote decentralization or regionalism; each local governments can compete each other to invite private sector with such incentives as zero price of land and five-year long zero corporate tax, etc. It is reasonable and effective to shift the power of certain taxation to local governments. It is getting quite common in China that local governments compete each other seriously to invite overseas investment by their own self-help efforts.
  • To promote service-based economy:
    Japanese economic structure should be shifted to service-based economy like US, where tertiary industry contains major working population.
    • It is estimated by 2010 in Japan that primary working population decrease one million, and secondary decreases 880 thousand, while tertiary increases two million. It is obvious that shortage of human resources in the industries of education, medical and nursing care, welfare, and other temporary staffing services.
    • It is effective to concurrently promote public investment as well as employment of the above areas as a set of safety nets.
    • Japan has expensed more pubic investment, but it includes expense for employment. We must consider as a set of expense including safety nets like cultivation of human resources. The share of such safety nets in France and Germany is around 2.5 to 3% of GDP, while that of Japan is around 0.3%. If Japan spends 3% of GDP as safety nets, it amounts 15 trillion yen.
    • Among tertiary industry, IT valued-added service division is most rapidly growing; Recent 'Business Week" journal asserts that there will be no recovery of US economy without success in such IT valued-added service. High quality of labor in China shows gaining ground on Japan and US.
  • More transparency in public finance:
    There will be no other country which has not so transparent national finance as Japan: There are 37 special accounts other than the general account. Further information disclosure of national and local finances and accountability must be urgent.

3. モノよりヒトへの投資:

  • 行政改革とは、国家構造の改革である。
  • 東京への一極集中是正:
    地方分権を進めることで自治体は競って企業誘致をすることが可能になる。例えば ある地域は土地代をゼロに、また5年間は法人税を無税にする。また地方への徴税権の移行する。中国では、誘致の競争が激しくすでに各時自体の自助努力が当然となっている。
  • サービスベースト・エコノミー:
    • 2010年までに第一次産業就労者数100万人減、第二次産業88万人減。一方第三次産業は200万人増と推計。特に、教育、医療、介護、福祉、人材派遣の分野は人材不足。
    • 公共投資と雇用費用(Safety net)とのセットにすべきで、上記のような人材不足部門へ投資することが重要。
    • 第三次産業の中でもITの機能を付加したサービス部門が最も伸びる。ビジネスウィークでもIT機能付加サービスの成功なくして米国経済の復活はないという見方である。また中国の労働者の質は極めて高く、日本も米国も押され気味である。
  • 財政の透明化:

>Top 4. Revise the National Public Service Law:

  • Total National debts: 1,200 trillion yen ($10 T)
    • Central and local debt: total about 700 trillion yen
    • Debts of special accounts of public corporations, and fiscal investment and loan through postal savings and insurance: total about 460 trillion yen
  • Annual budgets: total about 146 trillion yen
    • General account: 82 trillion yen
    • 37 special accounts: 60 trillion yen
    • 11 public corporations: 3 trillion yen
    • Furthermore, additional fund became available due to return of operation of employees' pension fund from private corporations to government: 60 trillion yen
    • When public officials operate these huge funds, further deficit, if occurred, would be worried.
  • Measures to bolster stock prices:
    • Postal savings: 240 trillion yen
    • Postal insurance: 120 trillion yen
  • Merit system:
    Revise National Public Services Law, and drastically change personal-system: if they earn profit by their operation, an incentive measure should be adopted.
  • Nominate top officials from private sector:
    • Introduction of "Political appointee" system
    • In US and UK majority of top officials are from private sector, while in Japan there are virtually zero.
    • Reform of the administrative system is essential from viewpoint of financial reconstruction


  • 国全体借金合計:1200兆円
    • 中央と地方の借金:約700兆円
    • 公団の特別会計、郵貯、簡保の財政投融資:約460兆円
  • 予算規模:約146兆円
    • 一般会計:82兆円
    • 37の特別会計:60兆円
    • 11の特殊法人:3兆円
    • 更に、厚生年金基金の代行返上により、運用可能な資金は60兆円ある。
    • 役人による運用で赤字が出ることが心配。
  • 株価対策
    • 郵便貯金:240兆円
    • 簡易保険:120兆円
  • 実績主義
  • 行政機関の幹部に民間人を
    • Political appointee制度の導入
    • 英米では幹部職の大半、日本はゼロ
    • 行政改革は財政再建からも必要

>Top 5. Self-help efforts of private companies:

  • More active globalism:
    • It is urged to have the distributed headquarter function in overseas cities.
    • The case of Itochu Corp.: already having functional headquarter of rubber business in Singapore, and wool business in Australia.
    • It is key that the headquarter should be located at the place nearer to the market and the node of information.
  • East Asia:
    • the market size: 2.1 billion population and 70 billion dollars
    • China is particularly important market.
    • Chinese competitiveness derives from not only cheap wage, but their high quality of labor and challenging spirit.

5. 企業側の自助努力:

  • 海外進出の積極推進:
    • 必要に応じて事業毎の本社も海外へ。
    • 伊藤忠の場合、ゴム関係はシンガポールへ、羊毛関係は豪州へ移している。
    • マーケットに近く、情報の集まる地域に本社が出なければ勝てない。
  • 東アジア:
    • 市場規模:人口21億人、7兆ドルの市場
    • 特に中国市場の重視
    • 中国の強さは、労賃の安さだけでなく、労働の質とやる気である。

>Top 6. Specific remedy for deflation:

  • In short-term, what we need is the reverse policy of Premier Koizumi's of "No recovery without reform." That is, "No reform without recovery."
  • First of all, adopt bold-faced change of taxation system, and boost economy steadly, and then promote national reform from long-term vision. Thereafter, Japanese Sun surely rise again.

6. デフレ下の特効薬:

  • 短期的に、今必要なのは、小泉首相のいう「改革なくして回復なし」の逆である。即ち、「回復なくして改革なし」である。
  • まず税制を大胆に改正し、景気を回復させた上で、長期視野に立って国家改革を進める。そうすれば、日本も「陽はまた昇る」と信じる。
  • IT technology and globalism have drastically changed economy. One-state solution is limited and not enough.
  • Japanese Sogo-shosha has followed along the path of Japanese economy, but they began to redefine themselves the raison d'etre in the rapidly changing global market.
  • IT技術とグローバル化は経済を根本的に変えた一国での解決には限界がある。
  • 日本の総合商社は日本経済の歩みと共に歩んできたが、彼らは、急速に変化しつつあるグローバル市場の中での存在理由を再定義し直した。

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