- Abe delivers keynote speech to investors in New York
- Pledges to work with BOJ to achieve `robust' economic growth
Japanese Prime Minister Shinzo Abe pledged to push for further improvements in corporate governance, including urging companies to make more progress in unwinding cross-held shares.
"We must let the governance system make a tangible difference," Abe said in a speech at Bloomberg’s New York headquarters Tuesday, days after he announced new targets for expanding the economy by 20 percent and halting population decline. “We are going to build a new system whereby CEOs and other board members should be transparently selected, and cross shareholding further dissolved."
Abe, 61, was speaking in English to an audience of around 260 investors. The decades-long practice of cross-held shares has come under fire as the government pushes for better use of capital in a nation with an aging, shrinking population. While the three largest banks have already pledged to sell some holdings, 8.5 trillion yen ($71 billion) more in such shares will be offloaded in the next few years, according to UBS Group AG’s wealth management unit.
Abe came to office in December 2012 touting a three-pronged economic revival plan -- unprecedented monetary easing, flexible fiscal policy and regulatory reform -- to defeat the deflation that has dogged Japan for more than a decade. While his policies have weakened the yen, lifted stock prices and boosted the profits of some bigger companies, the economy has stuttered with contractions in four of the ten quarters under his administration.
The BOJ’s main inflation gauge dropped into negative territory last month, marking the first minus figure since April 2013. In his remarks, Abe said the nation has successfully shrugged off the "deflation mindset." The government will focus on putting the economy on the path to robust growth via a new policy program called Abenomics 2.0., Abe said.
“I am determined, in cooperation with the Bank of Japan, to do whatever it takes to put the economy on a robust growth track,” Abe said.
When asked how Japan would deal with any fallout from a slowdown in China, Abe said that while Japan’s economic fundamentals are solid, the tight-knit economic ties between the two countries meant there was a need to monitor developments very closely.
"If external factors were to cause great confusion in the economy, we would deal with it by conducting fiscal action flexibly," he added.
Under Abenomics 2.0, the government will aim to boost the economy to 600 trillion yen, up about 20 percent from where it is now, and to put more money aside to support early education and bolster the social welfare system.
Immigration is not currently on the cards as a way of bolstering the population, Abe told reporters at a later press conference, when asked about the possibility of Japan accepting refugees as well as providing them with financial assistance.
"In terms of the population problem, there are things we should do before accepting immigrants, such as having women and the elderly be more active and improving the fertility rate," he said.
Abe, who was this month appointed to a second three-year term as leader of the ruling Liberal Democratic Party, told reporters he planned to reshuffle his cabinet and party executive on Oct. 7.
For more, read this QuickTake: Remaking Japan Inc.