Japan’s ‘Suganomics’ will target quick wins, not grand visions

Japan’s Prime Minister Yoshihide Suga, center, with cabinet ministers this week. Suga’s plans for structural reforms will focus more on spurring competition, rather than deeper social change. (AP)
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Updated 19 September 2020

Japan’s ‘Suganomics’ will target quick wins, not grand visions

  • New prime minister to build political capital in lead-up to introducing tougher reforms, officials say

TOKYO: Japan’s new prime minister will pursue economic structural reforms through a mixed bag of policies that target specific industries, rather than a grand strategy to reshape society and boost long-term growth.

Armed with a strong grip on Japan’s bureaucracy, Yoshihide Suga knows which levers to pull to get results, say government and ruling party officials who know him or have worked with him.
But an initial need to consolidate popular support means he will first target quick policy wins that will later give him the political capital to pursue tougher reforms, they said.
“He isn’t after visions. He’s someone who wants to accomplish small goals one by one,” said political analyst Atsuo Ito, a former ruling party staffer. “He’ll initially focus on pragmatic goals that directly affect people’s livelihood.”
Suga has said he will continue his predecessor Shinzo Abe’s pro-growth “Abenomics” strategy aimed at pulling Japan out of deflation with heavy monetary and fiscal stimulus coupled with structural reforms.
But unlike Abe, Suga’s plans for structural reforms will focus more on spurring competition, rather than deeper social change.
For Suga, economic reform will be a political priority in its own right, unlike Abe, whose reforms were wrapped up in a broader political agenda that included the thorny challenge of revising Japan’s pacifist constitution.
Suga must act quickly as his current term lasts for only for a year unless he calls a snap election to win the public’s mandate to run a full, three-year term.

HIGHLIGHTS

• Reform mix of ideas rather than grand strategy.

• Suga armed with strong grip on bureaucracy.

• Targets “quick-hit” reforms appealing to voters.

• Plans include consolidating small firms, lenders.

That means he will first seek “quick-hit” achievements that directly channel money to households. Among the sweeteners would be to slash cellphone charges by about 40 per cent, raise the minimum wage and increase payouts to cushion the blow from the pandemic.
“At this moment, he has to focus on very short-term issues like how to stimulate economy,” said Heizo Takenaka, who served in the cabinet of reformist former premier Junichiro Koizumi.
Removing protections in industry will be one such objective, even if that riles some parts of corporate Japan.
“Introducing competition among mobile phone carriers could be a very symbolic policy for Suga because he loves competition,” said Takenaka, who retains close contact with Suga. “He hates people with vested interests.”
If successful, Suga could pursue bolder reforms such as liberalising the heavily protected medical sector, consolidating weak regional banks and breaking barriers that hamper competition among small- and mid-sized firms.
Having served as Abe’s top spokesman, Suga already knows his way around Japan’s massive bureaucracy.
Suga relaxed visa requirements to boost inbound tourism, overcoming push-back from the justice ministry. He also cut through bureaucratic opposition and expanded a scheme that gave tax breaks for donations to Japan’s regional areas.
“Suga may not be charismatic, but he gets things done,” said Taimei Yamaguchi, a ruling party lawmaker close to Suga. “Some of the best advice I got from him was to make the most of the expertise the bureaucrats have.”
Some government officials say Suga’s focus on deregulation makes his policies closer to those of Koizumi, who consolidated big banks and deregulated the labor market in the early 2000s.
Suga’s slogan urging the public to “look after yourself before seeking government help” reflects his background as a self-made politician who made his way up from a son of a strawberry farmer to Japan’s leader, people who know him say.


Britain, EU tell each other to move on trade

Updated 20 October 2020

Britain, EU tell each other to move on trade

  • Both sides call on each other to protect billions of dollars of trade between the neighbors

BRUSSELS: Britain and the EU said on Monday the door was still open for a deal on their post-Brexit relationship, calling on each other to compromise to find a way to protect billions of dollars of trade between the neighbors.

With just over two months before Britain ends a status quo transition arrangement with the EU, talks on a trade deal are deadlocked, with neither wanting to move first to offer concessions.

A no-deal finale to Britain’s five-year Brexit drama would disrupt the operations of manufacturers, retailers, farmers and nearly every other sector — just as the economic hit from the coronavirus pandemic worsens.

European Commission Vice President Maros Sefcovic repeated on Monday that the EU still wanted a trade deal but not “at any cost” after British Prime Minister Boris Johnson said on Friday there was no point in continuing talks.

“It has to be a fair agreement for both sides — we are not going to sign an agreement at any cost,” Sefcovic told reporters after meeting Michael Gove, Britain’s point man on the existing divorce agreement, in London.

“The EU is ready to work until the last minute for a good agreement for both parties,” Sefcovic said.

Britain, increasingly frustrated by the EU’s refusal to start text-based talks, called on the bloc to make the first move, with its housing minister saying that Brussels only had to make “some relatively small but important changes.”

Housing Secretary Robert Jenrick called on the EU to “go that extra mile, to come closer to us on the points that remain for discussion.”

A spokesman for Johnson again ruled out prolonging any negotiation beyond the end of this year, when the transition period runs out, saying the EU “must be ready to discuss the detailed legal text of a treaty in all areas with a genuine wish to respect UK sovereignty and independence.”

EU chief negotiator Michel Barnier had been due in London for talks with British counterpart David Frost this week. Instead, they will now speak by telephone on Monday to discuss the structure of future talks, Barnier’s spokesman said.

Negotiations broke down on Thursday, when the EU demanded Britain give ground. Issues still to be resolved include fair competition rules, including state aid and fisheries. EU diplomats and officials cast Johnson’s move as a frantic bid to secure concessions before a last-minute deal was done, and European leaders have asked Barnier to continue talks.

British officials have repeatedly said any deal has to honor Britain’s new status as a sovereign country and not try to tie it to EU rules and regulations.

German Chancellor Angela Merkel said compromises on both sides would be needed. French President Emmanuel Macron said Britain needed a deal more than the 27-nation EU.

Britain is launching a campaign this week urging businesses to step up preparations for a no-deal departure. In a statement accompanying the launch, Gove says: “Make no mistake, there are changes coming in just 75 days and time is running out for businesses to act.”

More than 70 British business groups representing over 7 million workers on Sunday urged politicians to get back to the negotiating table next week and strike a deal.