物言う株主 企業価値向上へ対話の道探れ

The Yomiuri Shimbun June 29, 2013
Firms, shareholders must pursue dialogue to raise corporate value
物言う株主 企業価値向上へ対話の道探れ(6月28日付・読売社説)

Activist shareholders, including foreign funds that apply pressure on corporate management, have made their presence felt at recent shareholders meetings for the first time in a long time.

Through their resurgence, Japanese firms face a heavy challenge regarding how to improve corporate value through management reform.

The annual wave of general shareholders meetings of companies with business terms that ended in March has passed its peak. Activist shareholders were at center stage.

At a meeting of Seibu Holdings Inc., its largest shareholder, Cerberus Capital Management LP, argued against management policy and proposed eight director candidates of its own. But the U.S. fund failed to gain majority approval for its proposal as all the candidates recommended by Seibu were elected to the board of directors.

Before the shareholders meeting, Cerberus had pressed for reform of Seibu’s management through such moves as a takeover bid. Seibu argued against the Cerberus reform plan, leading to deepened confrontation with the U.S. fund. But Seibu appears to have managed to block the Cerberus offensive for the moment.

Nevertheless, Seibu’s reform is still pending as it seeks to be relisted. The company must tackle that difficult challenge while relations with its largest shareholder go unrepaired.

Questions to answer

Sony Corp. had been asked by a U.S. fund, one of its major shareholders, to spin off its movie and music business and list the new entity on the stock market. But Sony took a wary stance toward dividing up its businesses, arguing that synergistic effects can be expected with the manufacturing of TV sets and other businesses.

At its shareholders meeting, however, Sony was pressed on the separation issue by other shareholders. As a result, Sony announced a plan to study the demand. Improving earning capacity through reconstruction of its main line of business, including production of TV sets, has now become an important task for the Sony management.

Stable shareholders, including banks and business customers, account for a majority of shareholders in Japanese firms, so management often lacks a perspective of paying attention to shareholders. Japanese companies tend to put a low priority on earnings power and returning profits to shareholders.

More parties heard from

Abenomics, the economic policy pursued by the administration of Prime Minister Shinzo Abe, has drawn fresh global attention to the Japanese economy. As a result, the ratio of foreign holders of Japanese equities reached a record high of about 30 percent as of the end of March.

In addition to foreigners, the number of Japanese shareholders who strongly press demands, such as expansion of profits to improve corporate value, is certain to increase. Management must be prepared to listen sincerely to shareholders’ voices.

It is laudable that Toyota Motor Corp. and many other Japanese firms decided at this year’s shareholders meetings to adopt outside board directors, thereby meeting the requests of shareholders.

Nonetheless, shareholders’ demands for short-term stock price increases and higher dividends are not always right. Investment in personnel training and research and development is also vital from the viewpoint of enhancing corporate competitiveness in the medium and long term.

Management has a responsibility to present reasonable policy and continue dialogue with shareholders even if it turns down their specific demands.

Improving corporate value is a common goal for firms and shareholders. They will be required to accelerate management reform amid their tense relationship.

(From The Yomiuri Shimbun, June 28, 2013)
(2013年6月28日01時27分  読売新聞)


通常国会閉幕 首相問責で野党は何を得たか

The Yomiuri Shimbun June 28, 2013
Opposition parties lost more than they gained through censure
通常国会閉幕 首相問責で野党は何を得たか(6月27日付・読売社説)

The ordinary Diet session has closed in a terribly disorganized manner.

On Wednesday, the last day of the Diet session, the House of Councillors adopted a censure motion against Prime Minister Shinzo Abe. The Democratic Party of Japan, Your Party, and other opposition parties voted for the motion in the opposition-dominated chamber.

Then the opposition parties refused deliberations of bills in the upper house, behaving as if such refusal was reasonable. Key bills, such as those to revise the Electric Utility Law and the Daily Life Protection Law, were scrapped as a result. A bill to formulate a basic law on the water cycle, which was submitted as lawmaker-initiated legislation to protect water sources, was discarded as well.

The censure motion was submitted by the People’s Life Party, Green Wind and the Social Democratic Party. They condemned Abe for his recent skipping of deliberations at the upper house Budget Committee, claiming the act “violates the Constitution.”

Clear political motive

It is clear the motive of the three parties was to use Abe’s absence from certain Diet deliberations as a tool to launch an offensive against the Liberal Democratic Party ahead of the upcoming upper house election. Do they really think such actions will be welcomed by the public? If so, we have to warn them that they have made a glaring mistake.

In the first place, were Abe’s actions really worthy of censure? Abe absented himself in response to the unilateral decision by Budget Committee Chairman Hajime Ishii, a DPJ member, to hold intensive deliberations at the committee meetings, using the chairman’s authority to hold such meetings. The ruling parties said a no-confidence motion against upper house President Kenji Hirata, which had been submitted earlier, should be dealt with first, and boycotted the deliberations.

That was the reason why Chief Cabinet Secretary Yoshihide Suga defended Abe’s actions, saying that the prime minister had “sound justification” for skipping the deliberations. We believe Suga’s explanation has some validity.

On the other hand, it is extremely difficult to understand why the DPJ’s upper house caucus decided to vote for the censure motion.

On Tuesday, the DPJ assured the ruling parties that it would prioritize the passage of important bills and thus will not agree with the censure motion.

However, the next morning, the DPJ abruptly changed its attitude, having been persuaded by Your Party and other opposition parties. If the DPJ had kept its initial stance, the key bills would have been able to pass the Diet smoothly.

We believe the DPJ itself still has a vivid memory of being distressed by censure motions, which lack legally binding power, when the party held the reins of government. DPJ Secretary General Goshi Hosono defended the party’s action by saying, “The LDP has no enthusiasm for completing the bills.” This remark is a transparent attempt to dodge the DPJ’s responsibility and shift blame to the LDP.

This Diet session’s top political issue was electoral system reform for the House of Representatives. Regarding that issue, the ruling parties exchanged documents with opposition parties confirming that “once the upper house election finishes, parties will immediately resume negotiations and reach a conclusion” on drastic reform, including a reduction in the number of lower house seats.

However, if the parties continue insisting upon only their own ideas for reducing lower house seats and do not compromise, and if they continue their attitude of putting party interest above national interest, making such agreements will be absolutely meaningless.

Creating a third-party body

To break the impasse on the issue, Abe revealed a proposal at a press conference held after the end of the Diet session. “I would like to suggest establishing a third-party organization [on electoral system reform], which comprises experts from the private sector, within the Diet,” Abe said. We believe this is a sound proposal.

The organization should have binding power so the parties would comply with the conclusion of experts.

Meanwhile, during the Diet session, the Commission on the Constitution in both the lower and the upper house has vigorously discussed the issue of amending the Constitution, even debating on the specific contents of each amendment. Constitutional amendments are likely to become a major point of contention in the upper house election. We urge parties to make concrete proposals during the election campaign, so that the voters can make informed decisions on the issue.

(From The Yomiuri Shimbun, June 27, 2013)
(2013年6月27日01時17分  読売新聞)


離島防衛訓練 自衛隊に海兵隊機能が必要だ

The Yomiuri Shimbun June 26, 2013
SDF must be equipped with functions like those of U.S. marines
離島防衛訓練 自衛隊に海兵隊機能が必要だ(6月25日付・読売社説)

To bolster the defense of Senkakus and other remote islands, the Self-Defense Forces urgently require upgraded capabilities similar to those of the U.S. Marine Corps, such as the ability to carry out amphibious landings and rapid deployment.

The SDF and the U.S. military have been conducting joint exercises in California for the defense of remote islands. This is the first time the Ground, Maritime and Air Self-Defense Forces have all conducted overseas exercises with the U.S. military.

During the training, the U.S. military’s new MV-22 Osprey transport aircraft landed on the deck of an MSDF destroyer. The GSDF’s Western Army Infantry Regiment, which is primarily responsible for the defense of remote islands, was engaged in joint training with U.S. marines to regain remote islands captured by an enemy.

These are practical exercises to meet the needs of the times, as the defense of remote islands is of increased importance.

Chinese expansionism

Training has been conducted with the Chinese military as the supposed enemy. China called for the training to be canceled as its timing overlapped with a U.S.-China summit meeting. It is natural that Tokyo and Washington refused the Chinese request.

Under the banner of making China a maritime power, that country’s navy, air force and State Oceanic Administration have been bolstering their equipment, openly aiming to expand their territorial and national interests in the East and South China seas.

Intrusions by China’s maritime surveillance ships into Japanese territorial waters around the Senkaku Islands can be dealt with by the Japan Coast Guard. But to deter Chinese special forces from occupying the islands, it will be indispensable to improve the quick reaction capabilities that can be acquired through the joint exercises of the SDF and U.S. military.

Military threats to Japan have changed dramatically since the end of the Cold War. Invasions of remote islands can be considered “new threats” along with missile strikes, terrorist attacks and cyber-attacks. SDF personnel allocations, equipment and training must be reexamined in accordance with the changed threats.

Defense of remote islands will be a core of the new National Defense Program Guidelines to be compiled by late December.

It will be essential to augment the GSDF’s Western Army Infantry Regiment, which plays a central role in defense of the Nansei Islands stretching from Kagoshima Prefecture through Okinawa Prefecture, as well as to obtain equipment such as amphibious landing vehicles. To secure naval and air supremacy, it will be necessary to increase the number of MSDF destroyers and ASDF fighter jets and early warning aircraft so as to strengthen warning and surveillance activities.

New hardware needed

Procurement of the Global Hawk, an unmanned surveillance aircraft, must be accelerated while introduction of Osprey tilt-rotor aircraft must be studied earnestly.

Amphibious vehicles and Osprey aircraft will be useful for rescue operations and relief activities in damaged areas in times of major disasters such as earthquakes.

The administration of Prime Minister Shinzo Abe has boosted the defense budget for the current fiscal year, the first increase in 11 years, reversing the trend of year-on-year erosion in defense spending. Given the worsening of the security environment around Japan, defense spending must be increased next fiscal year and onward. But a huge hike cannot be expected in light of stringent fiscal conditions.

It is essential to allocate defense budgets on a priority basis, such as by expanding allocations for bolstering “dynamic defense capabilities” that emphasize troop mobility, particularly for defense of remote islands, while curtailing spending through cuts in the number of GSDF personnel, consolidation and abolition of bases and efficient procurement of equipment.

(From The Yomiuri Shimbun, June 25, 2013)
(2013年6月25日01時27分  読売新聞)


首相沖縄訪問 政府一丸で基地負担を減らせ

The Yomiuri Shimbun June 25, 2013
Govt needs to make unified efforts to reduce burden on Okinawa
首相沖縄訪問 政府一丸で基地負担を減らせ(6月24日付・読売社説)

To reduce the excessive burden on Okinawa Prefecture of hosting U.S. military bases, the government must make unified efforts.

On Sunday, the 68th anniversary of the end of the Battle of Okinawa during World War II, Prime Minister Shinzo Abe visited the prefecture and attended a memorial ceremony held to console the souls of those who died in the battle.

Foreign Minister Fumio Kishida, Defense Minister Itsunori Onodera and Ichita Yamamoto, state minister for Okinawa affairs, also attended the ceremony. It marked the first participation by foreign and defense ministers since such ceremonies were first held in 1962.

To tackle the Okinawa issues, it is essential that the ministries concerned closely cooperate with each other and coordinate views with local governments in a multitiered manner.

‘Visible’ reduction

Following the ceremony, Abe said his government would implement measures to reduce the burden of Okinawa “visibly.” With regard to the U.S. Marine Corps’ Futenma Air Station, Abe said the Futenma base should not be permanently used. “We’d like to make efforts to realize the relocation of the base as soon as possible,” he said.

The governments of Japan and the United States announced in early April that the tracts of land, more than 1,000 hectares when combined, that are now used for the six U.S. military facilities in the southern part of the prefecture will be returned to Japan over the next 10 to 16 years.

The quickest way to reduce Okinawa’s burden of hosting the U.S. bases is to steadily implement this plan. It is particularly important to realize the relocation of Futenma Air Station in Ginowan to the Henoko area of Nago.

Both governments agreed on June 13 that the return of the residential area of western Futenma used by Camp Zukeran in Ginowan, originally scheduled for next fiscal year, would be carried out within this year.

This can be highly evaluated as part of the government’s efforts to improve the environment for Okinawa Gov. Yoshikazu Nakaima to approve the reclamation of land from public waters, planned in line with the relocation of the air station to the Henoko coastal area.

It is important for the central and local governments to hold talks over those areas that are to be vacated with the return of the U.S. military facilities and discuss ways to use them more efficiently. Such efforts should be made in tandem with the implementation of various measures designed to promote the local economies of Okinawa. They would certainly enhance the significance of the return of the U.S. bases to Japan.

Promotion of economy

After the ceremony, Abe and Nakaima exchanged views over how to promote the Okinawa economy. While fostering their relationship of trust, Abe should win a broader understanding of Nakaima over the Futenma relocation to the Henoko district.

On the other hand, the reduction of Okinawa’s burden of hosting U.S. bases should be made, in principle, while maintaining the deterrence of the U.S. forces stationed in Okinawa Prefecture.

This is essential because the ability to respond rapidly and maintain mobility of the Self-Defense Forces and the U.S. forces stationed in Japan has become more important in the light of the nuclear and missile development by North Korea and the rapid military buildup and aggressive actions of China.

The town assembly of Yonaguni, Okinawa Prefecture, approved on Thursday the lease of land to the central government needed for the deployment of a Ground Self-Defense Force unit on the Yonaguni Island to monitor coastal areas.

The Defense Ministry and the town were once at odds over the payment of cooperation expenses to the town concerning the deployment of the GSDF unit. But they are expected to conclude the lease contract later this week.

For both the SDF and the U.S. forces in Japan to operate effectively, it is essential for both to build stable and amicable relations with local officials concerned. The Defense Ministry needs to continuously deepen its ties with Okinawa by making use of various opportunities in the days ahead.

(From The Yomiuri Shimbun, June 24, 2013)
(2013年6月24日01時40分  読売新聞)


都議選自公完勝 アベノミクスへの期待票だ

The Yomiuri Shimbun June 25, 2013
Abenomics helped LDP, Komeito score huge victory in Tokyo poll
都議選自公完勝 アベノミクスへの期待票だ(6月24日付・読売社説)

The administration of Prime Minister Shinzo Abe has been given a significant boost. It remains to be seen whether the voters’ verdict this time will affect the outcome of next month’s House of Councillors election.

In the Tokyo Metropolitan Assembly election on Sunday, all of the Liberal Democratic Party’s candidates were elected, and the LDP regained its status as the largest party in the assembly. The LDP’s coalition partner, New Komeito, also succeeded in having all of its candidates elected, and it took over as the second-largest force.

The LDP and Komeito, which form the ruling coalition, threw their support behind Tokyo Gov. Naoki Inose and together far exceeded a majority of seats in the 127-seat assembly. The metropolitan government will certainly gain stability.

DPJ trounced

As there were few contentious issues on how to steer the administration of the metropolitan government, the assembly election, the first major electoral contest since the second Abe Cabinet was launched in December, focused mainly on the public’s evaluation of Abenomics, the Abe administration’s handling of economic policies.

Given the landslide victory of both the LDP and Komeito, it can safely be said the Abe administration’s key policies and its government management received a favorable rating from Tokyo voters.

However, there have been a number of recent cases in which candidates backed by the LDP have lost to incumbents in local contests, including the June 16 gubernatorial election in Shizuoka Prefecture.

Commenting on the results of the Tokyo assembly election, Abe told reporters, “What we need now is to brace ourselves by deepening our sense of humility.”

The DPJ, which became the largest party after the previous Tokyo assembly election in 2009, suffered a shattering defeat, plunging to fourth position in the assembly. This appears to reflect the deep-rooted distrust of voters after the party committed a number of serious blunders over the handling of national politics. It is evident that the party has failed to stop its decline in strength.

In its latest electoral campaign, the DPJ stressed the negative aspects of Abenomics by taking note of the current erratic fluctuations of stock prices and exchange rates. The party’s unyielding reproach against the government without offering counterproposals apparently failed to satisfy the electorate.

In the upcoming upper house race, the DPJ should have in-depth policy discussions with the LDP by presenting specific policy measures that offer an alternative to government policies.

Despite fielding a large number of candidates in the Tokyo assembly race, Nippon Ishin no Kai (Japan Restoration Party) fared extremely poorly. This was probably due to remarks by the party’s coleader Toru Hashimoto regarding the issue of so-called comfort women.

During the campaign, former Tokyo Gov. Shintaro Ishihara, the other party coleader, complained about Hashimoto. In response, Hashimoto hinted he might step down from the party’s top post depending on the outcome of the Tokyo contest.

It should be noted that Tokyo is Ishihara’s hometown. The disastrous defeat of Ishin no Kai should be attributed partly to the dwindling influence of Ishihara over Tokyo voters.

Link with upper house race

Your Party, which withdrew from an electoral cooperation accord with Ishin no Kai because of the Hashimoto remarks on the comfort women issue, did remarkably well considering it fought the election single-handedly. The party seems to have obtained some degree of support from floating voters who are averse to the LDP and the DPJ.

The Japanese Communist Party doubled its seats in the Tokyo assembly to become the third-largest party in the assembly. This may be due to the low turnout compared with the previous Tokyo assembly election as well as its solid support base on the strength of its organizational skills.

Attention is now focused on how the respective parties’ vote-garnering capabilities that have been demonstrated in the Tokyo race may affect the electoral landscape for the July upper house election.

(From The Yomiuri Shimbun, June 24, 2013)
(2013年6月24日01時40分  読売新聞)


中国海洋強国化 地域の緊張どこまで高めるか

The Yomiuri Shimbun June 24, 2013
How far is China going to heighten tensions in the region?
中国海洋強国化 地域の緊張どこまで高めるか(6月23日付・読売社説)

As long as China has committed itself to taking a path of “peaceful development,” it must take the initiative and relax tensions in its international relations.

The administration of President Xi Jinping, which has declared this year the “first year for making China a maritime power,” has been accelerating moves aimed at forcibly enclosing the East China Sea and South China Sea.

In late April, Beijing started cruise tours to the Paracel Islands in the South China Sea, triggering a fierce reaction from Vietnam, which has been locked in a territorial dispute with China over the islets.

Each cruise tour comprises about 200 passengers who can swim and go sightseeing on the islets, in what appears to be an attempt to make the visitors tangibly feel that China wields effective control over the chain. The scale of the tours is likely to be expanded.

‘Patriotic education’

Beijing launched the cruise tour program after the city of Sansha was placed in charge of administering three island groups--the Paracel Islands, the Spratly Islands and the Macclesfield Bank--in June last year.

The cruise tours of the Paracels are considered part of China’s “maritime version of the patriotic education program,” along with the planned construction of a national maritime museum in the suburbs of Tianjin, northern China, with a view to broadening public support for Beijing’s bid to secure its maritime interests.

On Wednesday, Xi met with his Vietnamese counterpart on his trip to China. A joint statement released after their talks stated the two countries will “remain calm and avoid action that could complicate or escalate a dispute.”

That these two countries at loggerheads have agreed to prevent any further deterioration of ties over the dispute should be welcomed. It is crucial, however, that China and Vietnam abide by the accord, rather than just letting it end up as words on paper.

In May, Chinese surveillance ships started patrols in waters surrounding the Spratly Islands that have been under the effective control of the Philippines. This is similar to China’s regular patrols by surveillance vessels since last year in waters around the Scarborough Shoal near the Macclesfield Bank.

In February, Beijing’s first aircraft carrier, the Liaoning, docked for the first time at its homeport in Qingdao, Shangdong Provice. China is believed poised to have the Liaoning set out for a long-distance voyage before the end of the year. Flaunting its bolstered naval capabilities may be designed to put pressure on Japan, the United States and other countries.

Chinese surveillance ships have continued to make regular intrusions in waters near the Senkaku Islands, Okinawa Prefecture.

In the latest U.S.-China summit meeting, President Barack Obama was quoted as telling Xi that the U.S. government would not accept China intimidating Japan, a U.S. ally. This remark can be interpreted as a warning to China over repeated provocations by its ships in the waters. Obama’s remark is important in that it will solidify the Japan-U.S. alliance.

‘Shelving’ logic irrational

We cannot overlook the fact that high-ranking officials of the Xi administration are trying to change the status quo over the Senkakus by reiterating that the issue “must be shelved.”

Fundamentally, no territorial problem between Japan and China exists, so there is nothing to be shelved.

Back in 1992, China itself did away with the logic of “shelving” the dispute by stipulating explicitly for the first time what it claims to be China’s “sovereignty” over the Senkaku Islands in its Territorial Waters Law.

In a series of meetings of the Association of Southeast Asian Nations to be held from late this month to early July, discussions will be made on various issues, including the principle of the “rule of law” in the South China Sea.

At these meetings, the Japanese government must actively explain the historial facts involving the Senkakus and the urgent need to strictly abide by internationally acceptable rules so as to persuasively convey Japan’s position.

(From The Yomiuri Shimbun, June 23, 2013)
(2013年6月23日01時32分  読売新聞)


米核軍縮提案 中国の核増強にも目を向けよ

The Yomiuri Shimbun June 23, 2013
Obama's call for U.S., Russian N-cuts should help boost stability in Asia
米核軍縮提案 中国の核増強にも目を向けよ(6月22日付・読売社説)

U.S. President Barack Obama’s proposal for Russia to start new negotiations to reduce both sides’ nuclear weapons should lead to enhancement of security in Asia amid a growing mood for nuclear disarmament.

In Berlin, Obama recently made a speech seeking such negotiated cuts with Russia.

Obama said he wants to reduce the maximum number of U.S. and Russian deployed strategic nuclear warheads by one-third from 1,550--set under the New START, which stands for Strategic Arms Reduction Treaty--to about 1,000 each.

He also intends to target smaller, tactical nuclear weapons, which are less powerful, for the proposed cuts.

The U.S. president appears to have used the speech to express his willingness to continue to pursue nuclear disarmament during his second term in office after achieving the conclusion of the New START in his first term.

Prospects of N-talks unclear

However, Russia has given the cold shoulder to Obama’s call, with Russian Deputy Prime Minister Dmitry Rogozin saying Moscow “can’t take such a proposal seriously.”

Russia is strongly concerned that U.S. plans for a missile defense system in Europe could weaken its nuclear deterrent capability.

Therefore, prospects of the proposed nuclear disarmament negotiations are dim. But the United States and Russia, both nuclear superpowers, in particular bear responsibility for ensuring world stability.

At present, there are reportedly more than 10,000 nuclear weapons in the world, of which 95 percent are owned by these two countries. It is not convincing if they urge other countries to refrain from having nuclear weapons or to reduce their nuclear arsenals without making any reductions themselves. We hope the both countries will keep that point in mind and sincerely work on nuclear reductions.

In making the proposal, Obama also said his country would work together with its North Atlantic Treaty Organization allies to seek cuts in U.S. and Russian strategic nuclear weapons.

N-weapons spreading in Asia

Meanwhile, the ability of Obama, who won the Nobel Peace Prize for his vision and work to seek “a world without nuclear weapons,” likely will be tested over his future efforts in Asia, where nuclear weapons have spread.

Currently, China has about 250 nuclear warheads. China, India and Pakistan have been building up their nuclear arsenals while North Korea has conducted three nuclear tests, pressing ahead with its efforts to develop nuclear missiles.

In Japan, which depends on the U.S. “nuclear umbrella” amid such circumstances, some people may worry that Washington’s push for nuclear reductions could have adverse effects on regional stability in Asia.

However, Obama said in the Berlin speech, “I’ve determined that we can ensure the security of America and our allies, and maintain a strong and credible strategic deterrent,” even if the United States and Russia reduce their nuclear weapons in line with Obama’s proposal. Such remarks are reassuring.

Meanwhile, we urge China to promote nuclear reductions in tandem with the United States and Russia. Chinese President Xi Jinping and Obama have agreed to push for North Korea’s denuclearization. To urge Pyongyang to abandon nuclear weapons, however, Beijing should scale down its own nuclear capability.

Also, to allow the Comprehensive Nuclear Test Ban Treaty to come into force as early as possible, Washington and Beijing should work together to build support in their countries to ratify it.

(From The Yomiuri Shimbun, June 22, 2013)
(2013年6月22日01時33分  読売新聞)


FRB出口戦略 市場の混乱防ぐ舵取りが要る

The Yomiuri Shimbun June 22, 2013
Fed needed to steer policy for preventing market turmoil
FRB出口戦略 市場の混乱防ぐ舵取りが要る(6月21日付・読売社説)

The U.S. Federal Reserve Board is poised to begin scaling back by the end of the year its third round of quantitative monetary easing, a huge stimulus program known as QE3 that has helped shore up the U.S. economy.

Fed Chairman Ben Bernanke, in a press conference Wednesday following a two-day meeting of the bank's monetary policy panel, the Federal Open Market Committee, revealed for the first time the central bank's “exit strategy” for normalizing its ultra-easy monetary policy.

Regarding QE3, under which the the Fed purchases Treasury and mortgage-backed bonds at a monthly pace of $85 billion (about 8.2 trillion yen), Bernanke said it would be “appropriate to moderate the monthly pace of purchases later this year...and we will continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year,” as long as the country sustains its economic recovery.

Sign of confidence

The Fed's announcement of a policy shift toward reducing QE3 and clearly stating a goal for ending it, while predicated on the condition that the U.S. economy continues to grow as expected, received attention worldwide and is certain to have wide-ranging effects.

Ever since the financial crisis that erupted following the collapse of Lehman Brothers in September 2008, the U.S. central bank has carried out quantitative easing three times to end the crisis and prop up business activity.

The long-awaited launch of an exit strategy signals the central bank is ready to make a major change to policies that were aimed at coping with an emergency situation.

Bernanke’s bold remarks appear to be backed by confidence in the fundamentals of the U.S. economy, which have indicated recovery recently. He may also have thought it necessary to dispel a sense of uncertainty in the market over the future of U.S. monetary policy.

Stock prices in New York, however, tumbled on Wednesday with the Dow Jones industrial average closing more than 200 points lower than the previous day, while prices on the Tokyo Stock Exchange also dropped sharply on Thursday.

These declines were largely due to a surge in investors selling shares out of fears that cash flowing into the market may dwindle.

In the wake of Bernanke’s statement, concerns will likely persist over erratic fluctuations in stock prices and foreign exchange rates in the world's markets, which will present the Fed with the knotty task of preventing market confusion.

Toward the end of last year, the Fed said it would not lift short-term interest rates from zero until the unemployment rate shrinks to 6.5 percent, while also keeping an eye on inflation. The easy-money measure has been in place since December 2008.

It is widely believed, however, that the U.S. jobless rate will not move from the current 7.6 percent to the Fed's target until 2014 at the earliest. Improvement in the U.S. employment situation has remained slow, making a full-fledged economic recovery uncertain.

Learn from U.S. challenges

Moreover, possible adverse impacts on business activities of fiscal belt-tightening by the administration of President Barack Obama cannot be underestimated.

Will the Fed be able to lift its zero interest rate policy after bringing QE3 to an end without causing market tumult? In this respect, we urge the central bank to use all the tools at its disposal to maintain a “dialogue with the market.”

The Bank of Japan, which has also implemented an extraordinary monetary easing policy, should learn from challenges the Fed is now addressing.

The BOJ needs to maintain its focus on ending deflation and resuscitating the national economy to maximize the effects of its monetary policy. But sooner or later, the central bank will need to seriously examine how it will dial back these policies.

(From The Yomiuri Shimbun, June 21, 2013)
(2013年6月21日01時20分  読売新聞)


G8首脳宣言 日本経済が久々に示す存在感

The Yomiuri Shimbun June 21, 2013
Japan, Abenomics grabbed spotlight at G-8 summit meeting
G8首脳宣言 日本経済が久々に示す存在感(6月20日付・読売社説)

For the first time in many years, a Japanese prime minister has grabbed the spotlight in the international arena. Now all eyes are on whether Shinzo Abe can steadily implement his policies to rejuvenate Japan’s economy, a pledge the prime minister presented to world leaders at the recent Group of Eight summit meeting.

The summit meeting, held at Lough Erne, Northern Ireland, concluded Tuesday after the adoption of a joint statement. Leaders of Japan, the United States, Germany, and other G-8 nations took part in the meeting.

“Global economic prospects remain weak,” the statement said, stressing the necessity for countries “to press ahead with the necessary reforms to restore sustainable growth and jobs.”

The eurozone economy is still trapped in negative growth, and the growth of China and other emerging nations, which have been serving as the locomotive of the world economy, has lost steam. It was absolutely necessary for the G-8 nations to reconfirm their unity at the summit.

Expectations for Abenomics

One of the agenda items discussed at the meeting was Abenomics, the economic policy of the Abe administration. During the meeting, Abe told world leaders that “Japan’s economic development will give a boost to the economic progress of the world.”

It is noteworthy that the statement referred to the so-called “three arrows” of Abenomics--bold monetary easing, fiscal stimulus and growth strategy. The statement gave a positive assessment to Abenomics, saying that the three arrows would underpin the nation’s growth.

Japan must work hard to meet this global expectation and speed up its efforts to conquer deflation and rejuvenate its economy.

However, the statement did not forget to make requests of Japan, whose fiscal condition is the worst among advanced nations. Japan needs to “address the challenge of defining a credible medium-term fiscal plan,” the statement said.

The Abe administration plans to draw up a medium-term fiscal plan this summer. It is crucial for the government to show in the fiscal plan a concrete path toward simultaneously achieving the goals of economic growth and fiscal rehabilitation. After announcing the plan, the government must make wholehearted efforts to realize it.

The statement said open trade is a key engine of global economic growth. It listed ongoing free trade talks, such as the Trans-Pacific Partnership framework talks in which Japan is involved, and added that the G-8 nations “aim to finalize all these deals as soon as possible.” In this regard, we urge the Abe administration to speed up its preparations for agricultural liberalization.

Regarding the problem of tax avoidance, or global companies trying to reduce their tax payments by exploiting low tax rates of certain countries, the G-8 leaders agreed to speed up their efforts to create an international legal framework to prevent such moves. This is an important step forward--we urge Japan to play a leading role in establishing a framework that enables countries to fairly collect taxes from companies.

Pile pressure on N. Korea

The G-8 leaders also agreed to take concerted action on measures against terrorism in North Africa, in light of January’s hostage crisis at an Algerian natural gas complex. This is also a laudable development.

The joint statement demanded North Korea to abandon its nuclear and ballistic missile programs and refrain from taking provocative actions. It also urged Pyongyang to address the concerns of the international community over its human rights violations, including the abduction issue.

We believe it suggests that Abe’s message on North Korean problems was appreciated by the G-8 leaders. Abe has been keen to express Japan’s stance on the issue.

The G-8 leaders should also seek to join hands with China to urge North Korea to comply with U.N. Security Council resolutions as well as obligations stipulated in a joint statement issued in six-party talks on Pyongyang’s nuclear program.

(From the Yomiuri Shimbun, June 20, 2013)
(2013年6月20日01時28分  読売新聞)


G8とシリア 依然見つからない内戦の出口

The Yomiuri Shimbun June 20, 2013
No end in sight for Syrian civil war, as arms support grows on both sides
G8とシリア 依然見つからない内戦の出口(6月19日付・読売社説)

How can the Syrian civil war be brought to an end? Leaders of the Group of Eight major powers should do their utmost to put an agreement on this issue reached in their latest meeting into practice.

Regarding the Syrian situation, a focus of attention at the two-day G-8 summit meeting in Northern Ireland, Prime Minister Shinzo Abe and other leaders agreed to seek an international conference as early as possible to end the bloodshed in the Middle East country.

The agreement came after U.S. President Barack Obama and Russian President Vladimir Putin agreed in a separate meeting to hold such a conference.

Although Obama and Putin reiterated their shared recognition that an international conference is important for dealing with the Syria situation, their views on the matter still differ widely.

A quagmire of violence

During the summit meeting, Obama and Putin were unable to resolve their differences. While Obama considers the creation of a transitional government in Syria without Syrian President Bashar Assad as a goal of the envisaged international conference, Putin opposes any move to remove Assad from power.

The Syrian civil war has turned into a quagmire, with the violence becoming increasingly severe. The death toll has topped 90,000 in the about two years since demonstrations calling for Assad's resignation started. The situation is serious.

The international community is divided into pro-Assad and anti-Assad groups.

The European Union, which has criticized the suppression of human rights by the Assad administration, lifted a ban on arms exports to Syria, paving the way for supplying weapons to Syrian rebels.

The United States, meanwhile, has decided to provide military assistance to the Syrian rebels, after saying it had evidence that the Assad administration had used chemical weapons. It is widely believed that Washington will soon provide Syrian rebels with ammunition and other military supplies.

In contrast, Russia, which backs the Syrian government, argued that the United States’ assertion is groundless and plans to support the Assad administration by offering surface-to-air missiles.

Lebanon’s Hizbollah militia, which is supported by Iran, has recently joined the Syrian government forces. There is no sign of the war subsiding.

It is necessary to get facts about the alleged use of chemical weapons by the Assad government, which is one reason for the mutual distrust between Washington and Moscow.

Peace talks needed

Unless peace talks get on track, the Syrian civil war may drag on and there also is concern that it could destabilize surrounding countries.

Taking advantage of the ongoing civil war, Islamic militants linked to Al-Qaida, an international terrorist network, have expanded their influence. Is there not a risk that some of the large amount of arms to be distributed could land in the hands of terrorist groups?

Meanwhile, the number of Syrian refugees who fled to Jordan and other neighboring countries has exceeded 1.5 million. Taking in these refugees is a heavy burden for those countries.

During the G-8 summit meeting, Abe announced the government will offer $10 million in emergency grant aid to assist evacuees in Syria and refugees, as well as provide yen loans worth $120 million to Jordan.

It is necessary to seek a political solution for ending the Syrian civil war, and G-8 countries must provide as much humanitarian assistance as possible.

(From The Yomiuri Shimbun, June 19, 2013)
(2013年6月19日02時11分  読売新聞)


イラン大統領選 対外強硬路線は修正されるか

The Yomiuri Shimbun June 19, 2013
Will Iran’s hard-line stance change under new president?
イラン大統領選 対外強硬路線は修正されるか(6月18日付・読売社説)

How can Iran’s newly elected president live up to the people’s will expressed in the presidential election? We hope the new leader will first tackle the task of mending relations with foreign countries.

Hasan Rowhani, a conservative and moderate candidate, emerged victorious in the election held Saturday at a time when Iran has become increasingly isolated internationally due to its nuclear development. Rowhani, a cleric, won overwhelmingly after calling for improved relations with the United States and Europe.

Rowhani garnered more than half of the votes cast to score a stunning victory over a conservative hard-liner who had been billed as the leading candidate.

In acknowledging his win, Rowhani said it was “a victory of wisdom over radicalism.” He appears to be willing to follow a line that maintains a distance from that of the current administration.

It will be desirable for the international community if Rowhani shifts from the hard-line diplomatic policy pursued by outgoing President Mahmoud Ahmadinejad, who caused alarm by making provocative statements such as calling for Israel “to be wiped off the map.”

Behind Rowhani’s resounding victory is a sense of stagnation that is enveloping Iranian society.

During Ahmadinejad’s two terms over eight years, tight controls were placed on reformist politicians and freedom of speech. The United States and Europe have imposed economic sanctions in response to Iran’s continued nuclear development. This led to decreased crude oil exports and skyrocketing domestic prices of goods, which has stung people’s livelihoods.

A mandate to end impasse

Iranian voters, it may be said, have given Rowhani a mandate to break the stalemate.

A focal point is how he will deal with the nuclear issue.

Iran has been pressing ahead with uranium enrichment in defiance of U.N. Security Council resolutions. Tehran has enriched some uranium to 20 percent, far exceeding the 3.5 percent of nuclear fuel used at nuclear power plants. This unavoidably has stirred suspicions that Iran aims to develop nuclear weapons.

The five permanent members of the U.N. Security Council and Germany have placed highest priority of having Iran stop production of uranium enriched to 20 percent.

It is natural that the United States and European countries have urged Iran anew after the election to quickly resolve the nuclear issue diplomatically.

During the Iranian administration led by reformist President Mohammad Khatami from 1997 to 2005, Rowhani showed flexibility as he conducted nuclear negotiations with Britain, France and Germany. Nevertheless, little optimism can be warranted at this time.

Khamenei holds real power

In Iran, supreme leader Ayatollah Ali Khamenei holds the reins of power, including diplomatic decisions. Under the union of religion and politics in Iran, there can be no change in nuclear policy unless it is approved by Khamenei. Can such a key person change Iran’s policy stance?

Israel has not ruled out the option of a military strike to prevent Iran from possessing nuclear weapons. Military tension in the region will heighten if Iran continues its nuclear development.

Chief Cabinet Secretary Yoshihide Suga expressed hope that Iran’s change of president will bring about concrete progress toward resolving the nuclear issue. Japan will lean on the new adminisration to achieve that goal by utilizing their “traditional relationship of friendship” as leverage.

Japan relies on the Middle East for most of its crude oil imports, so ensuring stability in the region is a matter of life and death. The Iranian situation demands constant vigilance.

(From The Yomiuri Shimbun, June 18, 2013)
(2013年6月18日01時33分  読売新聞)


知財ビジョン 国際競争に勝つための体制に

The Yomiuri Shimbun June 18, 2013
Safeguarding intellectual property rights key to competing globally
知財ビジョン 国際競争に勝つための体制に(6月17日付・読売社説)

Intellectual property rights such as patents and trademarks relevant to cutting-edge technologies are undoubtedly the source of the international competitiveness of the nation’s industries.

The need has been increasing for further strengthening joint private-public arrangements to effectively utilize the nation’s intellectual properties.

The government has drawn up a “vision of intellectual property policy” with a view to laying out Japan’s approach toward handling intellectual property rights for the next 10 years, while deciding on a set of “basic principles” on the matter.

It’s been 11 years since the country laid down an outline of intellectual property strategy.

In recent years, manufacturing businesses in such countries as South Korea and China have grown stronger, intensifying global competition among companies, including those in the United States and Europe, which place high importance on the protection of intellectual property rights.

In-house inventions a focus

It is reasonable that the government, having a heightened sense of crisis over the circumstances, has embarked on overhauling the nation’s intellectual property policy in a way well-suited to the times. The envisioned policy shift can be expected to provide impetus to the growth strategy being undertaken by the administration of Prime Minister Shinzo Abe.

Worthy of note in the envisioned policy is a new idea concerning “in-house inventions,” or inventions created by employees while performing research and development activities for their firms.

In the basic principles, the government has proposed two options for discussion: reviewing the current patent system, which stipulates patent ownership belongs to employees, so as to have the ownership belong to companies; or requiring patent ownership to be covered in a contract between the employee and the employer.

There have been many instances in which employees dissatisfied with the compensation paid by their companies in return for their in-house inventions have sued the companies, causing the firms to be ordered to pay huge sums of settlement money. The government-proposed changes of patent ownership is in response to demands from businesses to rectify the situation.

If the changes take effect, businesses will find the risks of being subject to patent ownership-related lawsuits mitigated, making it easier for them to craft management strategies by flexibly utilizing patents.

On the other hand, there are concerns the policy shift would affect adversely the willingness of researchers to engage in R&D and end up in a brain drain overseas.

The government is set to clarify the pros and cons of the two envisaged steps. Further studies and in-depth discussions should be carried out from the standpoint of beefing up Japan’s industrial competitiveness.

The proposals are worthy of high marks because they seek the enhancement of support for small and midsize businesses, which are delaying charting out intellectual property strategies on their own. These proposals should make it easier for them to develop human resources relevant to patent matters with the support of experts, such as chartered patent agents.

The basic principles have also incorporated steps for sending from Japan patent examiners to emerging economies in such areas as Asia to help them build infrastructure with an eye toward protecting intellectual property rights.

While an increasing number of Japanese companies are branching out abroad, intellectual property right protection is insufficient in emerging countries, which is a major impediment to Japanese firms’ efforts to expand there. Having a “Japan model” spread overseas in this respect will greatly benefit Japanese businesses.

Increase patent examiners

A key issue is how to prevent important technological information from illegally flowing out to emerging countries and others.

The basic principles have rightly pointed out the need for strengthening the nation’s intellectual property right protection arrangements. Information leakage abroad is a serious problem that could shake the very foundation of Japan’s industries.

Steps should be taken to prevent retirees and others from taking technological information out of the country. Such measures as encouraging companies and their employees to conclude an agreement on maintaining confidentiality of corporate secrets should be promptly put into force.

Compared to the United States and European countries, Japan has few government officials in charge of screening patent applications and related matters. It is critical to increase the number of patent examiners to ensure prompt acquisition of patent ownership and its effective use.

(From The Yomiuri Shimbun, June 17, 2013)
(2013年6月17日01時21分  読売新聞)


川重社長解任 合併で混乱招いた社内抗争劇

The Yomiuri Shimbun June 17, 2013
Kawasaki Heavy power struggle keeping market on tenterhooks
川重社長解任 合併で混乱招いた社内抗争劇(6月16日付・読売社説)

It is unusual in Japan to see the head of a major company suddenly dismissed. The market is now watching with a sharp eye the confusion caused by a power struggle within a major company.

Kawasaki Heavy Industries Ltd. dismissed President Satoshi Hasegawa and two other directors during an ad hoc board meeting on Thursday. The three had been pushing merger talks with Mitsui Engineering & Shipbuilding Co. The company also said it decided to scrap the integration talks.

Shigeru Murayama, who was promoted to president from senior vice president, said “a strong sense of distrust had developed” regarding their assertive way of pursuing the merger talks because the three had acted as if “the integration was a foregone conclusion.” It was an agonizing decision to dismiss them, he added.

What happened is in effect a palace coup staged jointly by Murayama and others to stop the merger plan with Mitsui Engineering.

In the shipbuilding and heavy machinery industry, Kawasaki Heavy is the nation's second largest company and Mitsui Engineering is the fifth. News reports revealed their integration talks at the end of April. If realized, the integration would have created a giant company with combined consolidated sales approaching 2 trillion yen.

Japanese shipbuilding companies once dominated the global market. Today, however, Chinese and South Korean rivals have overtaken Japanese companies.

It happened mainly because Japanese firms have suffered from a becalmed global shipbuilding market after the so-called Lehman shock and the negative effects of the super strong yen. They are also at a disadvantage to other Asian rivals in cost competitiveness.

Surviving fierce contest

Mizuho Corporate Bank, the main bank financing Kawasaki Heavy and Mitsui Engineering, acted as a middleman in their merger planning. The plan can be seen as one tactic aimed at survival in a fierce global contest.

In January, shipbuilding companies related to JFE Holdings, Inc. and IHI Corp. were integrated. Moves by Mitsubishi Heavy Industries, Ltd. and Imabari Shipbuilding Co., Ltd. to enhance their partnership apparently pushed Kawasaki Heavy and Mitsui Engineering toward the possible merger.

Within Kawasaki Heavy, however, opinions about the integration were greatly divided. Supporters and opponents to the merger plan apparently had different views on the actual businesses of the company.

Shipbuilding accounts for only 10 percent of Kawasaki Heavy’s sales. Manufacturing of trains, aerospace equipment and motorcycles is considered the company's major business.

Many strongly opposed the merger plan, arguing that it was expected to create synergies for the shipbuilding section but would not benefit the other unrelated sections much.

Industrial reorganization

Against this background, we urge Kawasaki Heavy to reflect on its past conduct of not disclosing important management information to the market at appropriate times. The company initially denied the preliminary merger talks but suddenly admitted them on Thursday.

Attention will now focus on what management strategies the two companies will develop in the wake of the merger talks being scrapped.

The new Kawasaki Heavy president said the company will continue to study the possibilities of integration, merger and acquisition, and partnership, but the specific proposals Murayama will make remain to be seen. It is also important for the company to readjust its relations with the main financing banks.

Meanwhile, Mitsui Engineering, whose business performance is sluggish, has a rocky road ahead.

The government revealed its policy to support industrial reorganization as a measure to enhance competitiveness of Japanese companies. However, the failed merger negotiations between Kawasaki Heavy and Mitsui Engineering proves that industrial organization is never an easy job.

(From The Yomiuri Shimbun, June 16, 2013)
(2013年6月16日付 読売新聞)


東京都議選告示 参院選を占う先行指標となる

The Yomiuri Shimbun June 15, 2013
Tokyo assembly poll foreshadows result of upper house elections
東京都議選告示 参院選を占う先行指標となる(6月14日付・読売社説)

The results of the June 23 Tokyo Metropolitan Assembly election, with about 10 million voters, will be a harbinger of results in the House of Councillors election scheduled for next month.

A major issue in the metropolitan assembly election will be what judgment parties make on Abenomics, the economic policy of Prime Minister Shinzo Abe’s government.

The official campaign period for the election starts Friday. However, the de facto election campaign is already overheating, with presidents and senior officials of political parties running to and fro in Tokyo.

The metropolitan assembly election attracts a lot of attention because in the past it has often foreshadowed the results of national elections held soon afterward.

Will history repeat?

In the previous metropolitan assembly election of 2009, for instance, the Liberal Democratic Party suffered a crushing defeat while the Democratic Party of Japan made a remarkable breakthrough to become the assembly’s largest group. It was as if the poll projected the results of the House of Representatives election the following month, which brought about a change of government.

In the upcoming metropolitan assembly election, the LDP is trying to become the largest party in the assembly again and to secure a stable majority with its partner New Komeito.

Their success or failure will likely predict whether the two parties will win a majority of seats in the upper house election, thus ending the divided Diet in which opposition parties control the upper house.

“[Abenomics] has drastically changed the dark, thick cloud and [negative] atmosphere that had covered Japan,” Abe said during a street speech in Tokyo. “If we keep this course, the economy will grow without doubt.”

The so-called third arrow of his economic policy, following bold monetary easing and flexible fiscal policy, is growth strategy. Since its outline has only just been announced, it should be allowed time to bear fruit.

However, what kind of road map to economic recovery is the LDP going to draw? The party needs to provide more detailed explanations.

Meanwhile, DPJ President Banri Kaieda stressed risks of Abenomics during his street speech. Abenomics “will raise prices, increase people’s burdens and destroy their livelihoods,” he said.

However, if he only stresses the disadvantages of Abenomics, it will not constitute convincing criticism. We hope Kaieda will engage in a substantial debate with the LDP by presenting a specific counterproposal to Abenomics.

Nippon Ishin no Kai (Japan Restoration Party) is losing steam due to remarks by its coleader Toru Hashimoto on so-called comfort women. Your Party, which had been building a coalition with Ishin no Kai, decided to cancel their cooperation in the metropolitan assembly election after Hashimoto made the remarks. The same situation is seen in the upper house election. Attention should be focused on what judgment voters will make on the so-called third force political parties.

In the metropolitan assembly, the LDP and Komeito are ruling parties supporting Tokyo Gov. Naoki Inose’s government. The DPJ, the largest group in the assembly, is also strengthening its position as a quasi-ruling party.

There thus appears to be no major issue of local Tokyo politics on which the election is likely to turn. How will voters without any party affiliation, who abound in urban areas, respond to the situation? Low voter turnout is one troubling possibility.

Tokyo facing challenges

In fact, however, the metropolitan government faces more than a few challenges. One of them is to make Tokyo more resistant to natural disasters as soon as possible. For instance, the metropolitan government must make a plan to deal with the huge number of people who would be unable to go home due to paralysis of public transportation after a major earthquake. It also must take fire prevention measures in residential areas crowded with wooden buildings.
Another urgent task for the metropolitan government is to reduce the number of children waiting to enter public day care centers and develop facilities for the elderly.

The metropolitan assembly election should be considered as an opportunity to think not only about Tokyo’s relationship with national politics but also about those specific challenges the nation’s capital is facing.

(From The Yomiuri Shimbun, June 14, 2013)
(2013年6月14日01時35分  読売新聞)


株価急落 相場の変動に振り回されるな

The Yomiuri Shimbun June 15, 2013
Govt, BOJ must stay calm in face of fast-changing market trends
株価急落 相場の変動に振り回されるな(6月14日付・読売社説)

Reflecting the turbulent moves of speculative money on world markets, erratic fluctuations in this country of both stock prices and exchange rates have continued.

Confronted with this situation, the government and the Bank of Japan must remain calm and steadily push ahead with down-to-earth economic policies.

The 225-issue Nikkei index on the Tokyo Stock Exchange fell sharply Thursday, ending the day at 12,445, down 843 points from Wednesday’s close. The yen’s appreciation, on the other hand, advanced, briefly hitting the 93 yen level against the dollar.

The Nikkei average, however, is still more than 2,000 points higher than it was when Prime Minister Shinzo Abe launched his second administration in late December.

3rd arrow fired

The recent strengthening of the yen is not so painful as to deal a heavy blow to export-oriented industries. It should be noted that a stronger yen has the favorable effect of stemming rises in import prices.

The government has mapped out the nation’s growth strategy, meaning that all three arrows of the Abe Cabinet’s Abenomics business stimulus package have been fired.

Overreacting to market trends could cause declines in confidence in the government and the central bank, and threaten market turmoil.

Abe and Bank of Japan Gov. Haruhiko Kuroda met Thursday to discuss the economic situation prior to the Group of Eight summit scheduled to open in Britain on Monday.

Kuroda was quoted as explaining to the prime minister that the current pace of Japan’s economic recovery “has gradually becoming more buoyant than before.” In response, Abe was quoted as saying the government would take its “share of responsibility by steadfastly implementing growth strategies and relevant policy measures.”

Their views can be said to represent a correct assessment of the current state of the economy.

The stock market plunge was attributed to the perception by the market that U.S. Federal Reserve Board Chairman Ben Bernanke may have hinted the Fed would wind down its ultra-easy monetary policy sooner than expected.

This led market players to move funds away from risky assets such as stocks.

Foreign investors who purchased Japanese stocks in large quantities have started to sell their shareholdings. In addition, speculative moves intended to drive down stock prices and high-speed, automated transactions are two other factors considered responsible for the market plunge.

Trying to control the global flow of money simply through Japan’s domestic policy measures is extremely difficult.

It is incorrect to call the decline in stock prices the result of “insufficiencies in growth strategies” needed to revitalize the economy.

However, the government should be partly blamed for misleading the public. When stock prices were on the rise until late May, the prime minister and ministers in charge of economic affairs repeatedly stressed that this was due to the “fruit of Abenomics.” They must engage in serious soul-searching over the new development, as the declines in stock prices could be deemed as representing a failure of the government’s economic policies.

Vigilance rather than action

Earlier this week, rumors spread that the Bank of Japan might hammer out measures to stabilize long-term interest rates. As soon as it was learned that the central bank has no such intention, the yen began to appreciate and stock prices dived.

The stock and financial markets appear to be “wooing” the central bank to come up with additional financial measures to stabilize the markets.

It is inadvisable for the bank to adopt any measures that kowtow to market pressures.

However, vigilance over market trends must be the order of the day.

(From The Yomiuri Shimbun, June 14, 2013)
(2013年6月14日01時35分  読売新聞)


薬のネット販売 安全性と利便性両立が必要だ

The Yomiuri Shimbun June 14, 2013
Regulation of online drug sales should promote safety, convenience
薬のネット販売 安全性と利便性両立が必要だ(6月13日付・読売社説)

We believe the government’s decision regarding the online sales of nonprescription drugs must please people who have limited means of transportation, such as the disabled and the elderly, and those who live on remote islands or in mountainous areas that lack pharmacies.

The government will mandate in its growth strategy, which is scheduled to be approved by the Cabinet on Friday, the lifting of a ban on online sales of nonprescription drugs, with certain exceptions.

Under the plan, regulations on online sales of nonprescription drugs will be significantly relaxed. Currently, only a limited number of drugs are allowed to be sold online, but consumers will soon be able to purchase most of the 11,400 existing nonprescription drugs through the Internet.

Although the economic impact of the move remains uncertain, the government expects the plan will be a symbol of its regulatory reform efforts.

The lifting of the ban was prompted by a Supreme Court ruling in January. The top court concluded that the Health, Labor and Welfare Ministry’s ordinance banning online sales of drugs--except for a few drugs said to have a low risk of side effects--was “illegal and invalid.”

The top court said the Pharmaceutical Affairs Law contained no clear indication that nonprescription drugs must be sold face-to-face. Currently, nonprescription drugs are required to be sold at drugstores through pharmacists or registered vendors.

The growth strategy said the safety of drugs should be discussed rationally and objectively, regardless of whether drugs are sold online or face-to-face, an apparent reflection of the judicial decision. We believe it is absolutely necessary to get rid of excessive regulations.

There has been research suggesting that the quality of communication conducted via the Internet is not necessarily inferior to that of face-to-face communication.

Some regulations necessary

However, we should not overlook a problem that emerged after the January ruling. Many companies have entered the online drug sales market since then. As a result, the ban on online sales has in effect dissolved along with the restrictions.

The possibility of nonprescription drugs causing serious side effects is extremely low. However, 24 cases of death resulting from nonprescription medication have been reported in the five years since fiscal 2007.

If massive amounts of nonprescription drugs are sold carelessly over the Internet, the risk of accidents will rise. Of course, the same can be said of over-the-counter sales, but we believe a certain amount of regulation of online sales of such drugs is necessary.

It was thus appropriate for the government to keep some exceptions to the ban on online sales of nonprescription drugs in tact. Due to safety considerations, the government said experts will further discuss the handling of 25 drugs, such as Loxonin, a prescription antipyretic-analgesic drug that was recently recategorized as a nonprescription drug.

Learn from foreign examples

The government said it will draw a conclusion on such drugs by the end of autumn, and aims to build a framework for them that is similar to the system for general nonprescription drugs, but which also promotes their careful sale and use. We want to remind the government of the importance of establishing a system that does not confuse consumers.

It seems that counterfeit drugs are being sold through some websites that sell privately imported drugs. The government must work out measures to effectively monitor such malicious businesses and eradicate them.

Britain is a good example to follow. The British government has already lifted its ban on online medicine sales. Business entities there are required to register with a pharmacist organization and obtain a mark of certification.

The government must make wholehearted efforts so that the safety and convenience of consumers will be achieved simultaneously.

(From The Yomiuri Shimbun, June 13, 2013)
(2013年6月13日01時27分  読売新聞)


トルコのデモ 首相の強権姿勢が反発招いた

The Yomiuri Shimbun June 13, 2013
Erdogan's heavy-handed policies fan flames of unrest in Turkey
トルコのデモ 首相の強権姿勢が反発招いた(6月12日付・読売社説)

In Turkey, which Prime Minister Shinzo Abe visited a month ago, police have fired tear gas and water cannons at demonstrators to quell protests calling for the resignation of Turkish Prime Minister Recep Tayyip Erdogan that have continued for more than 10 days.

The protests have brought turmoil to the country, leaving several people dead. We hope the serious unrest will be brought under control as soon as possible.

Turkey is a strategically important regional power that borders civil war-hit Syria and Iraq, which is in the middle of national rebuilding. If Turkey’s political uncertainty becomes prolonged, its burgeoning economy could suffer a setback. The unrest could also deal a blow to efforts to stabilize the Middle East.

The protests were triggered by a heavy-handed crackdown that involved the use of tear gas by police during a protest against a redevelopment plan for a park in the nation’s largest city of Istanbul.

Angry demonstrators, mostly young people, have harnessed the Internet to call on people to rise up, causing the number of antigovernment protesters to swell into the tens of thousands. The protests have since spread to the capital of Ankara and other cities.

Results oriented leader

Despite the criticism, Erdogan has delivered results by rebuilding his country’s economy. In the decade since he took office, Turkey’s gross domestic product has more than doubled, and the nation has raised its international status and become one of the Group of 20 major economies.

Turkish people apparently gave credit to Erdogan’s achievements, as his Justice and Development Party, a moderate Islamic party, overwhelmingly won in general elections in 2007 and 2011. It is understandable that the prime minister is confident in keeping his administration in power.

However, it is evident that public frustration has grown especially among secular people over his Islamic policy and perceived autocratic political style.

Since its foundation in the 1920s, Turkey has applied the principle of secularism, separating religion from politics.

But the recent enactment of a law banning alcohol sales from 10 p.m. to 6 a.m. has increasingly alarmed secular opponents that the law was enacted to uphold Islamic values.

In the wake of incidents such as the arrests of journalists critical of the government, questions also have been raised over freedom of speech in the country. Some protesters have criticized Turkey’s media as reporting from a pro-government viewpoint.

Authority challenged

According to his party’s rules, Erdogan, who is serving a third term, is supposed to step down as prime minister after the current term. However, there has been speculation that he will seek the presidency after beefing up the presidential authority by amending the Constitution.

Referring to protesters as “looters,” Erdogan remains defiant, urging loyalists of his party to take part in rallies in Ankara and Istanbul to counter antigovernment protests.

Such a firm stance has fueled concern that the confrontation between secularists and supporters of the ruling party will intensify.

Will Erdogan be able to avert further splits in society by listening to the voices of secular people, whose frustration has turned into protests? His ability to handle this incident will no doubt be tested.

(From The Yomiuri Shimbun, June 12, 2013)
(2013年6月12日01時18分  読売新聞)


米中首脳会談 力に依存しては共存できない

The Yomiuri Shimbun June 12, 2013
China's reliance on force hampers its pursuit of coexistence with U.S.
米中首脳会談 力に依存しては共存できない(6月11日付・読売社説)

For stability in the Asia-Pacific region, it is essential that the United States and China--the world’s sole superpower and the second-largest military and economic power--take confidence-building measures.

Chinese President Xi Jinping visited the United States and met with U.S. President Barack Obama at a retreat in California. It is unusual for a Chinese president to visit the United States only three months after his inauguration to meet with a U.S. president.

Through eight hours over two days, the two leaders discussed a new cooperative bilateral relationship. They agreed to step up pressure on North Korea over its nuclear programs and promote measures to address global warming. But their differences in intentions were conspicuous.

The “new model for a relationship between major countries” that Xi is seeking is a relationship with the United States on an equal footing, in which both sides respect each other’s social systems and core interests. Close attention should be paid to Xi’s remarks during the talks that “the vast Pacific Ocean has enough space for the two large nations of China and the United States.”

Obama, for his part, called for a “peaceful rise” of China based on the premise that it abide by international rules.

Cybersecurity concerns

Xi also requested information regarding U.S.-led Trans-Pacific Partnership multilateral trade talks. Beijing apparently is wary that the envisaged trade framework could effectively contain China.

Obama expressed concerns regarding the focal issue of cyber-attacks seeking illegal access to data, saying resolving cybersecurity issues would be key to the future of U.S.-China economic relations. His remarks are based on suspicions voiced in the United States that the Chinese government is involved in such activities.

As long as Xi insists that China is also “a victim of cyber-attacks,” Beijing should take measures to block hacking in cooperation with the United States.

As for the Japan-China confrontation over the Senkaku Islands in Okinawa Prefecture, Obama called for dialogue through diplomatic channels rather than actions on the East China Sea. This was meant to persuade China--which continues its saber-rattling by allowing its marine surveillance ships and other vessels to enter Japan’s territorial waters near the Senkaku Islands--to exercise self-restraint.

But Xi said he hopes those concerned, apparently referring to Japan among others, will stop taking provocative actions and promptly return to a track of settling problems appropriately through dialogue. This is an extremely self-serving stance. It is China that must restrain its excessive provocations.

Must behave responsibly

China’s attempts to unilaterally expand its maritime interests in the East China Sea and the South China Sea appear to contradict the “peaceful development” policy it vocally advocates.

If China seeks an equal relationship of coexistence with the United States, it must behave responsibly to achieve that end. Complying with international rules is a minimum obligation for Beijing.

The Japanese and U.S. governments are planning to set up a bilateral summit meeting to coincide with an upcoming Group of Eight summit meeting of major nations. Japan needs to reconfirm the importance of the Japan-U.S. alliance without lowering its guard against China, which is trying to reassure itself that it is indeed a major nation by relying on its mighty power.

(From The Yomiuri Shimbun, June 11, 2013)
(2013年6月11日01時18分  読売新聞)


中国・欧州摩擦 世界経済を損なう不公正貿易

The Yomiuri Shimbun June 11, 2013
Unfair trade practices, protectionism hurting growth of world economy
中国・欧州摩擦 世界経済を損なう不公正貿易(6月9日付・読売社説)

International trade disputes have been erupting frequently. It is important to correct unfair trade practices and revitalize the world economy.

The European Union recently reached a provisional decision to impose antidumping levies on imports of Chinese solar panels in two stages, saying that Chinese firms are exporting them at improperly low prices.

The EU will impose a tariff of about 12 percent on imported Chinese solar panels until early August, and increase this to an average of 48 percent later if Beijing does not take corrective measures to resolve the issue. The EU will decide by the end of the year on whether to keep the levies in place.

According to the EU, Chinese exporters sell their solar panels for as much as 90 percent below a fair market price. They have apparently been trying to increase sales in the EU market, the biggest export market for their products, with scant regard for making a profit.

Battered by China’s low-priced sales drive, business conditions for their European counterparts have deteriorated. Some have gone bankrupt.

EU position understandable

We can understand the EU stance of trying to rectify an unfair trade practice, in line with international rules of the World Trade Organization.

The EU will impose a low tariff in the first stage, as it attempts to elicit concessions from China amicably. It also took into account the caution some member nations such as Germany feel about taking tough measures against Beijing.

However, China reacted sharply and announced it would launch an investigation into the possible dumping of European wine on its market. This appears to be a tit-for-tat response.

As it remains uncertain whether European wine exports actually caused any actual loss to the Chinese market, Beijing’s forceful action can hardly be considered as adhering to international rules.

China and the EU also are at loggerheads over China-made mobile telecommunications equipment. The EU has launched an investigation into possible dumping by Chinese makers. The current situation could degenerate into the mutual imposition of sanctions.

EU countries and China have become key trading partners. Should their trade conflict escalate, it would adversely affect the global economy. We hope the EU and China try to settle their disputes as soon as possible through dialogue.

The growing trend toward protectionism in various parts of the world is a cause for concern. This is apparently designed to assist domestic industries while the world economy dawdles toward a full-fledged recovery and some newly emerging economies face a slowdown in growth.

Japan claim upheld

In May, the WTO upheld Japan’s claim against a controversial feed-in tariff program introduced by the Canadian province of Ontario. Only companies that meet certain local content levels for renewable energy-related equipment can take part in the program, in which electricity generated from renewable energy sources is sold to power companies at fixed prices.
The WTO ordered the province to take corrective measures.

Japan, together with the United States and the EU, have filed claims against China’s export controls on rare earth minerals, as well as Argentina’s import permission system for certain goods, such as automobiles. They referred the issues to the WTO because they wanted action to correct these unfair trade practices.

The rise of trade protectionism is detrimental to development of the world economy. Japan has to devise a strategy to cooperate with the United States and European countries, while holding on to the WTO rules as fundamental to promoting the global economy.

(From The Yomiuri Shimbun, June 9, 2013)
(2013年6月9日01時45分  読売新聞)