Provisional translation

Press Conference by Yoshimi Watanabe, Minister for Financial Services

(Excerpt)

April 18, 2008

[Opening Remarks by Minister Watanabe]

Good morning. Please ask me questions.

[Questions and Answers]

Q.

I will ask you about J-Power (Electric Power Development Co.). This week, the government recommended that TCI (the Children's Investment Fund) should abandon a plan to acquire additional shares in J-Power, based on an opinion provided by the Foreign Exchange Committee (Committee on Customs, Foreign Exchange and Other Transactions). As a reason for the recommendation, it was pointed out that there is concern that the plan may disrupt public order, for example by having adverse effects on the construction of nuclear power stations. You have been saying that explanations that satisfy market players must be provided (with regard to a government decision over this matter). Do you think that this decision satisfies market players or that convincing explanations have been provided?

A.

First of all, as I have repeatedly said, this is a matter to be decided by the Minister of Finance and the Minister of Economy, Trade and Industry, and I am not involved.

Therefore, as always, I will talk about this in general terms. In cases like this, the important thing is how to keep consistency between the imposition of restrictions according to the public nature of the business concerned and Japan's efforts to strengthen the competitiveness of its financial and capital markets and revitalize the markets. I have been saying that it is quite undesirable to create the impression that Japan is a closed country. I believe it is important to ensure that rules on foreign investment in Japan are enforced in a manner consistent with this.

Judging from media reports and publicly disclosed materials, TCI has often demanded measures for management improvement from a short-term perspective in order to boost shareholder value, and the key issue here is, as I understand it, that a stance like this could have adverse effects on the supply of electricity and the government's nuclear policy, which need to be considered from a long-term perspective. It seems to me that it has not been made clear what kind of explanations would be provided if the fund involved was a domestic one. Therefore, I do not think that this issue has been concluded. I think it is important to continue efforts to provide convincing explanations.

Q.

Regarding Japan Post Bank's request for the abolition of the 10-million-yen ceiling on the deposit amount, it seems to me that cautiousness about it is strong in the banking industry. Although it has yet to be deliberated by the Japan Post Privatization Committee, what do you think of this issue?

A.

This is not a matter subject to government approval. Japan Post Bank is requesting the revision of the relevant cabinet order. If I am to speak about the privatization of Japan Post in general, Japan Post Bank is required as a precondition to be confined to the same scope of businesses as before in the early part of the privatization process.

During the transitional period, this restriction is to be eased gradually based on opinions provided by the Privatization Committee and in light of whether Japan Post Bank is competing with other financial institutions on an equal footing and how its management condition is. Naturally, it is stipulated that the restriction on the scope of businesses should be abolished after the transition period expires. It is important to ensure that Japan Post Bank and Japan Post Insurance are absorbed smoothly into the private-sector financial system without causing disruptions. It is important to ensure that the privatization contributes to the stability of Japan's financial system and the vitality of the financial markets as a whole as well as the enhancement of user convenience.

Q.

Regarding J-Power, how do you assess the appropriateness of the decision to recommend the discontinuation?

A.

As this is a matter to be decided by the Minister of Economy, Trade and Industry and the Minister of Finance, I am not involved in this, as I have already told you.

Q.

You said it is important to continue efforts to provide convincing explanations and added that it is not yet clear what kind of explanations would be provided if the fund involved was a domestic one.

A.

I understand that explanations have not been provided in this respect since this case does not involve a domestic fund. What I meant was that it will continue to be necessary to provide convincing explanations when questions like this come up in the future.

Q.

I will ask you about the reform of the civil servant system. The Democratic Party of Japan has drawn up a counterproposal to the government bill for the basic act on the reform. How do you assess the counterproposal, which includes provisions for the cabinet's integrated control over senior servants and a ban on amakudari?

A.

I do not think that there is any difference between the basic directions of reform represented by the government bill and those of the counterproposal. In terms of philosophy, their thinking is similar to ours. The counterproposal may be described as almost the same as the government bill in that it seeks to establish a civil servant system ideally suited to support a parliamentary cabinet system and to encourage talented people to become civil servants and enable them to work with a sense of pride. Although there may be points of difference over details, I think that we can overcome such a problem through negotiations and reach a constructive conclusion.

Q.

Is there any possibility that the government and the DPJ will hold negotiations about a possible amendment of the bill?

A.

We should not act on the assumption that we will hold such negotiations. As we have already submitted the bill to the Diet, I hope that Diet debate and question and answer sessions will start early. Today, I reported to the Prime Minister on this matter. The bill was decided by the cabinet on April 4 and submitted to the Diet on the same day.

Two weeks have already passed since then. Over the two weeks, the bill has hung in the air, and I reported to the Prime Minister on this state of affairs. I will continue to ask the parties concerned to start Diet deliberations soon.

Q.

Did the Prime Minister say anything in response to your report?

A.

As I just made a simple report, he did not make any particular comment.

Q.

I hear that you met with the Prime Minister after today's cabinet meeting. Did you report what you told us about on that occasion?

A.

That is correct.

(End)

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