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

(Excerpt)

(Friday, July 3, 2015, 9:00 am to 9:18 am)

[Questions and answers]

Q.

I have a question about the Corporate Governance Code. Because it was introduced in June, a lot of companies have been appointing more outside directors, and apparently this is being very well received by investors, particularly overseas. But if you look at the people being selected as outside directors, you find that they include quite a lot of people, like former government officials, lawyers, and professors, who don’t have any business management experience. Some are therefore questioning whether this is going to lead to greater earning power, which is a stated aim of the Corporate Governance Code. The large number of former government officials is being singled out for particular criticism, as it seems that the number of amakudari posts has increased as a result of the Code. Minister, please share your views.

A.

That kind of criticism always comes up by press. So I have absolutely no intention of saying anything particular about it. In that business, the perspective of a government official is important. So I think a lot of companies are pleased, as they see it has having led to a major change in viewpoint. And regarding what you’ve said, because academics don’t have experience and don’t know organizations, their opinions will be those of people who have never spent time in organizations. How effective that will be I do not know. I think bringing in people from other industries is a good idea, though. Bringing people from software companies or distribution companies into manufacturing companies, for example. Or finance. Some companies can make great products but can’t do finance. Other companies can handle both finance and manufacturing, but can’t do marketing or succeed overseas. There are so many different situations. That sort of thing is happening in Japan now. I’ve been traveling around the regions, and there’s a town in Aichi Prefecture called Oguchi. 50 or so of the 1,760 to 1,770 local authorities in Japan don’t receive any subsidies from the national government, and this is one of them. I visited a company there that uses the slogan “make in Japan and win in the world.” Apparently, the slogan was thought up by one of their employees, not by the official of the Ministry of Economy, Trade and Industry. I asked them if Japan, if the government, could borrow the slogan. That kind of sense came from borrowing a director from a larger organization. Walking around different areas like that, seeing how corporate people view things, you find that older companies are more likely to incorporate things like that into their corporate governance. Before you know it, various past opinions gradually begin to stick like barnacles on the bottom of a boat, so completely different perspectives like that mean that a variety of opinions are raised at board of directors meetings or executive committee meetings. I think that if this approach spreads, it will be extremely effective for improving the business management. It’s all about who you choose.