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

(Excerpt)

(Friday, Octover 31, 2014, 8:37 am to 8:51am)

[Questions and answers]

Q.

What role do you think regional banks should play in the context of “rural revitalization”? What place do you see for regional and second-tier regional banks in financial administration?

A.

Many prime ministers and cabinets have sought to address the issues faced by rural areas, starting as far back as Kakuei Tanaka’s “the plan for remodeling the Japanese archipelago.” Greater concentration in Tokyo has been the result, meaning that these efforts are still on the way. I would have to say that they did not achieve their objectives. Back when Noboru Takeshita was prime minister, he decided to offer across-the-board grants of 100 million yen to local governments, whether villages or ordinance-designated cities, likely with the idea that this constituted “rural revitalization.” This was reported as being akin to a vast sowing of seeds. There was no mention, however, of any meticulous efforts to verify how this money was used. A look at the results shows that some towns put the money to good use, while in other places did not. I think there are some places in which the leadership demonstrated by the head of the local government has clearly made the difference in implementing good ideas locally.

The basic problem reportedly lies in the failure of top-down programs. In leaving matters to local leaders, however, it should be noted that there are some who can employ this money and authority to good effect and others who are at a loss about what to do. What is important in doing so is recognizing that regional banks in a particular city have ties that extend beyond that city and local companies. There are shinkin banks and other institutions such as, say, the Hiroshimashi Credit Cooperative that also have impressive capabilities. Mr. Yamamoto at the Hiroshimashi Credit Cooperative is extremely competent, and the Yamaguchi Bank in the Chugoku region and similar institutions undoubtedly have discerning people able to utilize and develop local resources. In this regard, then, I believe regional banks have access to the greatest amount of information and, when companies have an idea of what they want but not how to get it, it is regional banks that know all about what these companies are seeking. This is because the absolute number of the staff relocation of regional banks is quite low compared to city banks. Shinkin banks and regional banks deeply rooted in the community are far more knowledgeable about local conditions, just as reporters for the local newspapers are better acquainted with local circumstances than news outlets coming from Tokyo. The variety of information such people possess as well as numerous other factors might recommend certain approaches over others, and I think that localities across Japan should offer up ideas before any allocations are budgeted by the national government. The only way to make this work is to adopt the mindset that it is up to local governments to put forth ideas so that, say, the Ministry of Internal Affairs and Communications can earmark funds for particular purposes. Over the past several decades, though, many people have left outlying areas for Tokyo. In the UK, it seems to me that the most well-off people appear to be located in the suburbs or more rural areas.

For example, very few people could tell you that IBM has its headquarters in a small hamlet in New York State. It is doing perfectly fine there, and other major corporations are scattered across the country rather than being concentrated in New York or Chicago. This is not the case in Japan and, while my own arbitrary prejudices might be at work here, I believe this is because Japanese prefer refined settings to rustic ones. There is a characteristically human preference for walking around streets that are busy at night – not necessarily downtown, mind you – and I get the feeling that, because rural areas are away from “the action,” people do not settle down there, jobs are not created, and companies do not flourish. I probably need to look into this a little more. This is an extremely important problem for Japan, and I dwell on it because I live in a rural area.

(End)