Press Conference by Taro Aso, Deputy Prime Minister, Minister of Finance and Minister for Financial Services

(Excerpt)

(Thursday, December 27, 2012, from 1:13 a.m. to 1:50 a.m.)

[Questions and Answers]

Q.

In the new Cabinet, there is not a dedicated minister for financial services. Could you explain why?

A.

When I served as prime minister three years ago, there was also not a dedicated minister for financial services, with Minister (of Finance) Shoichi Nakagawa concurrently serving as the minister for financial services, as I remember it. Basically, financial and fiscal matters should not be discussed separately at various meetings. In the current international situation, in which problems that have started in the financial sector have very significant influence, I believe that it is appropriate for the minister of finance to combine the duties of the minister for financial services.

Q.

Let me confirm one point which was mentioned at an earlier press conference at the Prime Minister’s Office. Isn’t there any chance that the SME (Small and Medium-size Enterprises) Financing Facilitation Act, which is scheduled to expire next March, will be extended once again? The expiration of this law is expected to hurt SMEs considerably.

A.

The law will not be extended again. However, when this law expires - this is not limited to the SME Financing Facilitation Act - it is necessary to take various measures, such as drastic change impact mitigation measures, to use administrative jargon. Around 80% to 90% of the SMEs which applied for modification of lending terms based on the law were approved modification by financial institutions, and that has provided relief to them, while some other companies have made no effort because they expected that the law would be extended again for some time. The circumstances of SMEs vary widely from company to company, so it is necessary to change the way of dealing with them accordingly. Even if central government organizations try to impose their own ways, things do not always go as they like. That is the actual situation. Therefore, the Financial Services Agency’s (FSA) job is to instruct banks and other financial institutions to adequately deal with individual cases.

Q.

Regarding financial administration, what is your approach to the approval of new services planned by Japan Post’s two financial subsidiaries?

A.

In the case of Japan Post Insurance - in relation to the postal privatization, there are issues related to Japan Post Insurance and Japan Post Bank - on November 30, if I remember correctly, I hear that it was decided that conditional approval should be granted under the Postal Service Privatization Act, and I understand that approval based on the Insurance Business Act has remained pending. Strict examination should be conducted with regard to the conditions attached to the approval. Japan Post Insurance holds a vast amount of funds, and there have been many cases in which organizations to which customers’ funds have been entrusted suffered severe consequences after carelessly starting new services upon approval being given easily. Therefore, I understand that it is necessary to conduct appropriate risk management in that respect. Regarding Japan Post Bank, an opinion paper was adopted. The FSA received it only on December 18, so our examination has not made so much progress. I am not sure about exact dates.

Q.

In relation to the SME Financing Facilitation Act, you said earlier that various measures, including drastic change impact mitigation measures, will have to be taken as it is scheduled to expire. Under the government of the Democratic Party of Japan, the FSA, the Small and Medium Enterprise Agency and the Cabinet Office worked together to work out a policy package in April. Are you going to take action in line with this policy package, or do you think that would be insufficient?

A.

I am not familiar with all details of the policy package. If the policy package includes something useful, we look at it for reference. I am not so familiar with its details that I can say whether or not we will take action in line with it. In relation to the question asked just now, if we do not act flexibly and if we end the measures included in the package all at once, some companies may fail just before recovering, resulting in job losses. To prevent that, it is necessary to judge whether or not a certain company can recover with a little more help, and people who have the experience of managing companies generally can make such a judgment, while bureaucrats do not have such experience. In that sense, I don’t think that there are bureaucrats who fully understand accounting and business affairs. Therefore, if we are to deal with individual cases appropriately, we must consider using local consulting companies and certified SME advisers. We should not end those measures all at once, I think.

Q.

Do you mean you may work out new measures if necessary?

A.

That is correct. We will naturally do that if necessary. In some cases, struggling companies can attain recovery with a little more help, while others have no prospect for recovery. Therefore, it is difficult to closely examine all of them and judge whether or not they are close to recovery. Since local companies are not large, little attention is paid to them. What is really regrettable is that time-honored companies, including manufacturers which have all necessary elements, are struggling just because of a minor fund-raising problem or because of a lack of successors after the death of their owner managers. There have been many such cases. Many of such companies should be rescued depending on the circumstances, so we should act flexibly in that respect.

(End)