Panel, Conference Presentation
Will Foreign Hands and Better Corporate Governance Lift the Japanese Economy?
Milken InstituteKashi-san, Yamazaki-san, Hamada-sensei, John San, Kotaro Tamura, Yoshimasa Yoshiroyama
- The Japanese economy is projected to achieve 1.5% GDP growth for the current fiscal year driven by domestic demand, with a return to a steady recovery path expected after the consumption tax hike was postponed to April 17 to avoid stifling growth.
- The Ministry of Finance aims to formally introduce a corporate governance code in June to push return on equity above 8.7% and expects the GPIF to increase its equity allocation from 8% to 50%, while stock analysts project the Nikkei index to reach 30,000 or higher, and Goldman Sachs forecasts a 22,100 target within 12 months.
- A "Women's Labor Participation Promotion Act" currently in the Diet would mandate gender diversity targets and action plans for companies with 300+ employees, aiming to further increase the female labor participation rate for ages 25 to 44 beyond the recent 71% to 74% gain, supported by plans to import foreign housekeepers from the Philippines.
- To address a deepening demographic crisis and 2020 Olympic-related labor shortages, the government plans to accept foreign workers in construction and shipbuilding starting this April, legislate foreign job opportunities for nursing care and housekeeping, and import one million foreign senior caregivers from Southeast Asia starting next year outside of the EPA system.
- Tourism is positioned as a central growth pillar with a target of 50 million arrivals by the 2020 Olympics to generate $500 billion in business and raise the sector's economic contribution from 2% to 9%, utilizing strategies like integrated resorts and casinos.
- Fiscal consolidation relies on a mid-term roadmap to achieve a primary fiscal balance surplus by the 2020 target, supported by the implementation of the "My Number" system to match bank accounts with individuals within a year and improve tax collection efficiency.
- Corporate reforms anticipate a shift away from cross-shareholdings to increase capital efficiency and shareholder returns through buybacks and dividends, potentially triggering an M&A wave similar to Germany's post-EU history.
- Future policy trajectories include potential legislation to lower the corporate tax rate from its current 35% to maintain global competitiveness, while the government remains cautious about balancing cultural homogeneity with the necessary increase in immigration.