Good morning, ladies and gentlemen. Thank you for thaカジノシークレットntroduction.
The last Japan-U.S. Business Conference, in July 1998, took place the day after the Liberal Democratic Party suffered a major setback in the House of Councillors election. Both the Japanese and U.S. participants expressed great concern about a political vacuum in Japan delaying measures to stimulate the economy and stabilize the financial system, a situation which could possibly trigger worldwide depression. Participants from both sides of thaカジノシークレットacific called for the ruling and opposition parties to cooperate in adopting bold emergency measures.
Immediately after last year's conference, the administration of Prime Minister Keizo Obuchi was inaugurated, and since last fall Obuchi has displayed strong leadership in implementing a succession of measures required to overcome the economic crisis, including measures to stabilize the financial system, an emergency economic-stimulus package of 27 trillion yen, and large-scale corporate and income tax cuts.
Thaカジノシークレットrime minister has also made efforts to stabilize the administration's political base by entering into a coalition with the Liberal Party, headed by Ichiro Ozawa, in January of this year. And the LDP is continuing its efforts to form a cooperative alliance with the Komeito. If a three-party coalition of the LDP, Liberal Party, and Komeito is realized, the administration will have a stable majority in both houses of the National Diet, and the conditions will be in place for an even speedier adoption of necessary measures.
Paralleling these moves by the Obuchi administration has been the risaカジノシークレットn its approval rating, which jumped from around 20 percent at the time of Obuchi's inauguration to nearly 50 percent in recent public opinion polls.
Duaカジノシークレットartly to a series of government measures to stimulate aggregate demand, some bright spots have begun to appear in the Japanese economy, including the recovery of housing investment and personal consumption of certain goods, such as personal computers. Gross domestic product in the January-March quarter of this year grew by 1.9 percent over thaカジノシークレットrevious quarter, or 7.9 percent in annualized terms.
Sharaカジノシークレットrices have reacted positively to these trends, with the Nikkei average reaching around 18,000 after dropping to a low of 12,879 on October 9 of last year-a rise of 40 percent.
However, since the strong January- March-quarter growth was partly due to the effects of stepped-up public works spending, I do not think that we should be too optimistic about the economic outlook.
The general feeling is that the government has already done everything it can to stimulate economic activity from the demand side and that it is now thaカジノシークレットrivate sector's turn to take the lead and bring about the revival and revitalization of the Japanese economy under thaカジノシークレットrinciples of self-reliance, self-help, and self-responsibility. The recovery of business fixed investment holds the key to achieving this goal. Structural reforms on the supply side will be essential.
So, today I would like to talk about supply-side reforms and other structural reforms that are necessary to ensure Japan's continued economic and social growth in the twenty-first century.
As American participants at these Japan-U.S. Business Conferences havaカジノシークレットointed out on numerous occasions, the brisk growth of the U.S. economy today is the result of the efforts to promote deregulation and market competition in the 1980s. Another important factor has been the quick and bold responses of private enterprises in the United States to capitalize on new business opportunities created by these changes.
We believe that Japan, too, must now make serious efforts to strengthen industrial competitiveness and rejuvenate the economy in order to attain stable growth in the twenty-first century. This would boost domestic demand and contribute to the growth of the entire world economy.
Based on this recognition and drawing upon America's experience, the Competitiveness Commission, chaired by Prime Minister Obuchi, was established in March as a forum for the exchange of views between thaカジノシークレットrivate sector and the government. Based on the council's discussions, the government announced on June 11 a package of measures to create jobs, stabilize the employment situation, and strengthen competitiveness. We in the Japanese business community hope that some of the bills will be enacted during the current session of the Diet, which has been extended through August 13.
For its part, thaカジノシークレットrivate sector must fully utilize the measures to be adopted by the government to improve the business climate and strengthen its competitiveness.
For this purpose, the first priority must be to raise thaカジノシークレットroductivity of capital and labor.
At present, the demographic trend toward fewer children and an older population in Japan is proceeding at a rate unprecedented in the world. For this reason there are growing concerns about a shrinking of the working population and a drop in the savings ratio. To alleviate such concerns, productivity must be raised through the weeding out of inefficient industries and their replacement with thosaカジノシークレットossessing higher capital and labor efficiency. As for the heap of nonperforming loans held by Japanese financial institutions, the recent financial system stabilization measures provided a way out of thaカジノシークレットroblem, and so corporate borrowers must henceforth reduce their excess plant and equipment and outstanding loans and strive for the efficient use of managerial resources on the basis of self-responsibility and independent judgment. The government should continue to support thesaカジノシークレットrivate-sector efforts with tax and legal incentives.
Moreover, In order to respond swiftly and flexibly to changes in the business climate under global competition, companies must boost their management efficiency and productivity. In other words, they must explore how they may smoothly merge with one another, realign their organizations, split up operations, and divest some of their divisions. If Japan's legal framework and tax system pose obstacles to thesaカジノシークレットnitiatives, then new legislation and systems that conform to global standards must be quickly established.
Higher unemployment will be unavoidable in the short term in thaカジノシークレットrocess of implementing structural reforms. Business and labor leaders and government officials must pool their wisdom and resources to help displaced workers find new jobs and prevent higher unemployment from igniting social instability.
The government's recently announced emergency employment measures should ameliorate mismatches in skills between available jobs and workers by liberalizing the job placement and temporary staff industries and expanding vocational training programs. Waカジノシークレットn the business community should fully utilize these measures to create new jobs and stabilize the employment situation as well as develop new businesses in such growing sectors as nursing care for the elderly and telecommunications to help absorb surplus workers.
Continued efforts must also be made to abolish or ease regulations and adjust the high-cost structure of Japanese society. Promoting market competition through the abolition and easing of regulations not only strengthens the competitiveness of individual companies but also expands business opportunities for foreign companies in Japan.
In order to allay citizens' concerns about the future effects of the demographic trends toward fewer children and an older population, productivity must be enhanced through innovation. Thaカジノシークレットublic and private sectors must cooperate to promote R&D in new technologies to meet the challenges of the twenty-first century, such as the aging of society, environmental problems, and the growing importance of information, and foster core industries in such fields as telecommunications, biotechnology, and the environment.
By promoting technological innovations in these emerging sectors, I believe that Japan will be able to contribute to the stable growth of the world economy and thaカジノシークレットmprovement of the welfare of humankind.
In parallel with the strengthening of industrial competitiveness, reform of the social security system is often cited as an issue that thaカジノシークレットublic and private sectors in Japan will have to tackle together.
As a consequence of the declining number of children and the aging of thaカジノシークレットopulation, there is a danger that the "national burden" of social security and taxes, which today stands at about 36 percent of national income, will rise to over 60 percent by around 2020. This prospect is raising people's anxiety about the future, stifling consumption, and placing a drag on economic recovery. Accordingly, thaカジノシークレットublic and private sectors must cooperate to reform the social security system as quickly as possible to ensure its sustainability.
I have so far been describing the kind of structural reforms that Japan will have to make as we enter the twenty-first century. Now I would like to turn to Japan's contributions to the revival of the Asian economy and cooperation with the United States to further strengthen the trade regime under the World Trade Organization.
Two years havaカジノシークレットassed since the currency and economic crisis in Thailand in July 1997 triggered a crisis in economies throughout Asia; currencies, sharaカジノシークレットrices, and financial systems have stabilized to a certain extent. However, for Asia to recover its vitality as a growth center of the world, Japan must play a leading role, as it accounts for 70 percent of the region's GDP. We must swiftly resuscitate the Japanese economy in order to provide markets for Asian goods, while continuing to offer bilateral aid.
So far the Japanese government has provided 80 billion dollars in foreign aid to Asia, including 30 billion dollars under Finance Minister Kiichi Miyazawa's New Miyazawa Initiative; these efforts have been highly appreciated by the other Asian nations. Moreover, the many Japanese companies that have operations in Asia have chosen not to withdraw despite the economic crisis. They havaカジノシークレットut down roots in the local communities, choosing to maintain their presence and provide employment opportunities. We believe that the continuation of thesaカジノシークレットublic- and private-sector efforts is the best way for Japan to meet the expectations of both the Asian and world communities.
In view of the fact that rapid currency depreciation brought on by the outflow of short-term capital triggered the Asian currency and economic crises, it is important to strengthen Asian countries' financial systems and achieve currency stability. The Japanese government has proposed the creation of a currency basket linking Asian currencies with the yen, dollar, and euro. Also, at a conference of Asian business leaders in early May that I attended, somaカジノシークレットarticipants advocated the establishment of an organization that would function like an "Asian Monetary Fund."
In addition to these efforts, I believe that the yen should play a larger international role as a reserve and settlement currency. For this purpose, it is important to boost domestic and international confidencaカジノシークレットn the yen by restoring health to the Japanese economy and making the yen easier for foreign investors to use. Steps are already being taken to upgrade the Tokyo market-the withholding tax has been abolished for nonresidents, for example-and so from now on individual companies will need to make further efforts to increase their use of the yen in Asian business transactions.
Next I would like to comment on thaカジノシークレットmportance of Japan-U.S. cooperation in enhancing trade and investment rules.
The WTO is a forum for establishing the general rules of trade and investment, so the further strengthening of the WTO regimaカジノシークレットs essential for the expansion and development of free trade. The WTO ministerial meeting to be held in Seattle at the end of November will formally endorse the start of the next round of trade negotiations in the year 2000. The fate of this new round will hinge to a great extent on the leadership of Japan and the United States, which together account for 40 percent of the world's GDP.
To promote market economies and stabilizaカジノシークレットnternational trade, China-which is expected to become an economic power in the twenty-first century-will need to participataカジノシークレットn a trade regime based on international rules. Thus, an important task of the Japanese and U.S. business communities will be to cooperataカジノシークレットn calling for China's early accession to WTO membership.
At the same time, rising calls for protectionism from some quarters in the United States, as exemplified by the dumping charges against Japanese steel makers, are a cause for concern. The charges filed by the U.S. steel industry are an attempt to place the blame for its own problems on imported steel. This is an abuse of the antidumping system. Since these developments in the United States could give momentum to emerging protectionist moves worldwide, it is necessary to strengthen the antidumping rules of the WTO.
As the economy becomes increasingly globalized and information becomes extremely important, private businesses around the globe, including those in Japan and the United States, are facing issues they have never encountered before. Accordingly, Japanese and American businesspeople will increasingly need to exchange views on common emerging issues, such as electronic commerce and thaカジノシークレットromotion of a two-way flow of direct investment, and attempt to have their conclusions reflected in their respective countries' national policies in a timely manner.
I hope that the Japan-U.S. Business Conference will continue to serve as a forum for the discussion of issues of interest to both Japan aカジノシークレットhe United States aカジノシークレットhat the discussions over the next two days will be extremely fruitful.
Thank you for your attention.