Press Conference by Shizuka Kamei, Minister for Financial Services

(Excerpt)

(Friday, October 30, 2009, from 9:38 a.m. to 9:53 a.m.)

[Opening Remarks by Minister Kamei]

At 10 a.m. today, we will submit to the Diet the bill to suspend the sale of shares in Japan Post for the review of the postal businesses (the Bill on the Suspension of the Sale of Shares in Japan Post Holdings Co., Japan Post Bank and Japan Post Insurance) and the bill to prevent curbs on new loans and forcible collection of outstanding loans (Bill on Extraordinary Measures to Facilitate Financing for Small and Medium-size Enterprises). Now, Diet deliberations will start in earnest on these bills, which will help to energize struggling small and medium-size enterprises (SMEs) and small shops as well as salaried workers. We will quickly enact these bills and revise the financial inspection manual, and we will do our best to improve the situation of struggling SMEs and salaried workers toward the end of the year and beyond.

As I have been saying, while we will take these measures within the limited area of the jurisdiction of the FSA (Financial Services Agency), the cabinet must also properly implement economic measures so as to ensure that SMEs get jobs.

In the meantime, I recently invited officials of the Fair Trade Commission (FTC) to meet with me. We must ensure that jobs are contracted out to subcontractors at appropriate prices. We must make thorough efforts to create conditions for preventing subcontractors from being bullied. We have to realize all of these policy measures in a breath. We will do our best in this and other respects.

That is all I have to say.

[Questions and Answers]

Q.

You have hammered out these two bills in a very short period of time after the inauguration of the new government. How do you evaluate the contents of the bills and how much are you satisfied with them?

A.

This bill will form the basis of the review of the postal businesses. President Saito, who is a very capable man, took office the day before yesterday, just as we were preparing to suspend the sale of shares. He is really a capable man. When he served as a vice minister of finance, he exerted strong leadership and acted competently.

Under his leadership, the new management team is starting to operate, and I believe that he will do his part based on a fresh philosophy. I am hoping that the new president will act with a free hand under the new political philosophy.

As for the bill for the moratorium, as I told you earlier, this alone would not get SMEs out of their current problems, so I believe that the government must take on the responsibility for ensuring that jobs are contracted out to SMEs in an appropriate manner. Therefore, we will devote conscientious efforts to the compilation of the supplementary budget and the full budget for the next fiscal year, which will start from now on.

FSA employees, not to mention members of the three ruling parties, have done their utmost to draw up these bills in a short period of time by working hard until late night. I greatly appreciate their efforts. Although journalists significantly tried to undermine our efforts, these two excellent bills have been completed. Your criticism acted as a stimulant, and I would welcome your constructive criticism.

Q.

With Japan Airlines' decision to ask for support from Enterprise Turnaround Initiative Corporation of Japan (Kigyou Saisei Shien Kikou), the direction of the company's rehabilitation has been set. How do you expect the management condition of financial institutions will be affected by their planned forgiveness of loans totaling more than 200 billion yen?

A.

As JAL (Japan Airlines), as well as ANA (All Nippon Airways), plays an important role in the people's lives and the Japanese economy, it is extremely important that JAL be properly rehabilitated.

I understand that a task force was established under Minister (of Land, Infrastructure, Transport and Tourism) Maehara. At their request, our senior vice minister, Mr. Otsuka, joined the task force, and I expect him to offer various ideas.

Q.

The BOJ (Bank of Japan) is expected to decide as early as today to discontinue the purchase of CP and corporate bonds at the end of the year. What do you think of the BOJ's expected decision to do so at a time when you are submitting the bill to facilitate financing for SMEs?

A.

In light of the independence of the BOJ, I do not intend to say anything that may be taken as an intervention in its affairs.

However, I would like the BOJ to properly examine the actual state of the economy. I hope that the BOJ will make various policy decisions in light of the underlying economic condition and the future prospect, rather than focusing exclusively on short-term, temporary changes in numerical data.

Q.

I have a question relating to the JAL issue that was mentioned earlier. While it has become clear that JAL will ask for assistance from Enterprise Turnaround Initiative Corporation of Japan, there are expectations that the use of public funds will be required to provide a bridge loan and that cuts in JAL pension benefits will be inevitable. How do you view a move to enact special legislation related to the payment of pension benefits?

A.

This is not a matter that is directly under my jurisdiction. Although (as a cabinet member) I am collectively responsible for all these matters, Minister Maehara is doing his part based on his own ideas. He is a very capable minister, so I expect him to come up with good ideas. I have not yet heard about specifics.

Q.

Regarding the FTC, did the commission tell you how it would act in the future in response to your request? Also, I have a question relating to the lack of jobs contracted out by major companies to SMEs. Did you make a request or do you have any plan in relation to the situation in which jobs contracted out to SMEs are decreasing due to major companies' moves to consign jobs abroad, particularly to Southeast Asia and China?

A.

When I talked with the chairman and other senior officials, they told me that although the FTC has already been trying to prevent unfair transactions, it will make increased efforts to do so, so I am watching what specific actions the FTC will take. As the FTC chairman is a man of strong leadership, I expect him to respond to my request conscientiously.

As for your question concerning the hollowing-out of the economy, I think there are various factors behind it. One factor is labor cost. In this respect, subcontractors are facing a severe squeeze. However, I believe that basically, Japanese managers will not reach the clear-cut conclusion that Japanese companies should concentrate on manufacturing products at foreign plants and purchasing foreign parts while merely retaining the headquarters in Tokyo.

Japanese companies have a Japanese nature. Although some people make a crude argument that Japanese companies should move their headquarters to other countries, or to tax havens, I think that if Japanese companies are to prosper globally, Japanese managers should conduct management in ways that reflect Japanese culture, traditions and customs.

Previously, wages in Japan were relatively high due to the Japanese style of management. Despite such an unfavorable situation, Japan once became No. 1 in the world. We must reflect on such past experiences. Companies would not prosper merely by consigning jobs to subcontractors at low cost and reducing their manufacturing cost. In Japan, Japanese companies can pursue technological innovation and development as they please unlike in other countries. It is an advantage of operating in Japan that they can pursue such activities with a relative freedom unlike at foreign plants, so it is not impossible to improve productivity. I believe that it is possible to do so, and I doubt that moving manufacturing bases to other countries merely because of a simple reason (of short term cost) will enable companies to succeed. There are companies coming back to Japan. You know, some companies are moving manufacturing bases back to Japan.

Therefore, we must support efforts to prevent the hollowing-out. The government should support companies making such efforts in various ways. I expect that the Ministry of Economy, Trade and Industry will play the central role in this.

(End)