Akira Amari, Japan’s minister for economic and fiscal policy, has so much on his plate that all of his titles don’t fit on his business card. He’s also the minister in charge of economic revitalization and reforming social security and taxes and the head negotiator for the Trans-Pacific Partnership trade pact, Bloomberg Markets magazine will report in its October special issue on the 50 Most Influential people in global finance.
Sitting in his central Tokyo office across the road from Prime Minister Shinzo Abe’s, Amari furrows his brow as he considers his challenge: overturning decades-old regulations and spurring investment to revive the world’s third-biggest economy.
Abe, elected in a December landslide, is unleashing the most-sweeping overhaul in a generation to end 15 years of deflation and spark growth. He announced a 10.3 trillion yen ($105 billion) spending boost in January. In April, Haruhiko Kuroda, his handpicked Bank of Japan governor, pledged unprecedented monetary easing to double the amount of money circulating in Japan’s economy.
Now, in what the prime minister calls the third arrow in his quiver, Amari, 64, is crafting policies that will help Abenomics take off.
Abe, 58, wants to loosen rules governing industries from health care to agriculture and stimulate business expansion with tax breaks. He aims to increase annual private investment to 70 trillion yen, the level before the 2008 financial crisis, in three years. He’s shooting for an average annual growth rate of about 2 percent during the next decade. Japan’s economy expanded at an annualized rate of 2.6 percent in the three months through June.
“Amari may not be well-known globally like Kuroda, but what investors are looking at right now is to what extent Japan will be able to push through deregulations and structural reform,” says Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo.
Amari says he’s confident Abe’s reforms will reignite Japan, which has been stuck since real estate and stocks crashed in the early 1990s. Gross domestic product, when not adjusted for price changes, has barely budged in two decades, while the government’s debt burden has swelled to the world’s largest, at more than twice GDP.
“The growth strategy basically will light up the 500 trillion yen economy like a large pile of firewood,” Amari says.
Failure would be catastrophic, Deputy Economy Minister Yasutoshi Nishimura says. In a whirlwind tour in June and July, he and Amari hit the road to sell the plan.
“This is the last chance for the Japanese economy,” Nishimura says.
Investors expecting concrete details were disappointed when Abe outlined the growth strategy on June 5. The Nikkei 225 Stock Average dropped 3.8 percent that day. Economists want to see him cut corporate tax rates, make firings easier and further deregulate agriculture.
“The government will need to push forward bold reforms,” says Susumu Takahashi, chairman of consulting firm Japan Research Institute Ltd. and a member of the Abe-led Council on Economic and Fiscal Policy, which includes Amari and Kuroda.
Amari, who traces his ancestry to a 16th-century samurai general, is feeling the heat as Abe prepares to release detailed proposals this fall.
“Amari is the key man whose efforts are going to bring a meaningful growth strategy or disappointment,” Muto says.
For now, the nation’s economy is seeing some momentum from the first two arrows, of monetary and fiscal stimulus. A government report on Sept. 9 is forecast by economists surveyed by Bloomberg News to show that GDP rose at an annualized pace of 3.9 percent in the second quarter, higher than an initial estimate of 2.6 percent.
Japan’s growth adds to signs of improvement across some of the largest developed nations, with a U.S. Labor Department report today forecast to show nonfarm payroll gains accelerated in August from a July pace of 162,000. The jobless rate probably held at 7.4 percent, the lowest since December 2008. Germany and Britain are scheduled to release industrial output figures.
Amari, who helped Abe’s successful campaign for prime minister in 2006, has shaken up areas Abe is now targeting. During his four decades in politics, Amari dealt largely with commerce and industry. As labor minister from 1998 to 1999, he championed legislation that let more businesses use temporary workers -- getting around practices from the 1960s that even today make it costly to fire employees.
As trade minister from 2006 to 2008, he helped Japan agree on an economic partnership with the Association of Southeast Asian Nations, making it easier for Japanese companies to expand.
Today, Amari is leading Japan’s negotiations to join the Trans-Pacific Partnership trade zone. Abe wants to increase commerce with countries with which Japan has free-trade agreements to 70 percent by 2018 from 19 percent in 2012.
In his role as social security reformer, Amari will need to narrow a funding gap in welfare that’s spiraling upward as more Japanese retire.
“Amari is the brain pushing things forward as Abe’s point man on the economy,” says Daishiro Yamagiwa, a parliamentary secretary for the Cabinet Office, who has worked with Amari for 12 years. “Abe completely trusts Amari, leaving everything up to him to revitalize the economy.”
Amari is girding for battles with Japan’s strongest interests to make Abe’s plan a reality. The TPP pact that he’s negotiating offers Japan’s exporters more access to the U.S. and other markets. Many Japanese farmers oppose the deal because it would cut tariffs that protect domestic rice, milk, meats, wheat and dairy goods -- currently as high as 778 percent.
Abe wants to expand exports of agricultural, food, forestry and fishery products to 1 trillion yen by 2020 from 450 billion yen in 2012.
Amari will have to deal with competing government ministries jockeying for billions of yen in health-care-research funding. He intends to create a Japanese version of the National Institutes of Health to oversee medical research, angering bureaucracies that may lose control of their budgets.
“It’s doubtful whether Amari can fight a head-to-head battle against the vested interests,” says Hiroyuki Kishi, a former Trade Ministry official who’s now a professor at Keio University’s Graduate School of Media Design near Tokyo.
“Rather than a reformer, he is the kind of person who takes a split-the-difference approach between reformers and bureaucrats,” says Kishi, who worked with Amari when Amari was acting chairman of the Liberal Democratic Party’s policy research council from 2005 to 2006.
Amari, who says he has always wanted to make economics and industrial policy his life’s work, chose a first job that gave no hint of such aspirations. After graduating in 1972 from Keio University, where he majored in politics, he worked at Sony Corp., selling sound systems. At the time, Prime Minister Kakuei Tanaka was embarking on unprecedented public spending that he dubbed Remodeling the Japanese Archipelago.
Tsuneyoshi Kobayashi, the mayor of Atsugi, a city 45 kilometers (28 miles) southwest of Tokyo where he and Amari grew up, didn’t expect his boyhood friend to become a politician.
“He was very genuine, rather shy and not very proactive,” Kobayashi says.
Amari’s father, Tadashi, proved a motivator. The elder Amari lost twice in national elections before winning a seat in the lower house of parliament in 1976. Amari remembers constituents interrupting family meals to seek his father’s guidance.
“For a person who worked as hard as he could for the sake of the people, it’s wrong that he didn’t receive recognition,” Amari says. “I thought I’d try to rectify this.”
Amari served as his father’s secretary for nine years. In 1983, he won his father’s seat in Japan’s House of Representatives.
Now, three decades later, Abe is betting that Amari will help steer Japan’s next expansion.
“We could sense his resolve,” says Takeshi Niinami, a member of the Industrial Competitiveness Council, which designed the growth strategy. Niinami, chief executive officer of Japanese convenience store chain Lawson Inc., says Amari pushed for Abe’s reforms.
The minister descended from Torayasu Amari, one of the 24 generals of 16th-century warlord Shingen Takeda, has a chance to make history of his own.
Amari holds the keys to the biggest shift in Japan’s economy since the 1980s, when his predecessors embraced a surge in the yen, introduced a sales tax and sold the national railways and telephone monopoly. A generation later, Amari is embarking on a task that he measures in personal terms:
“I will do my best to meet the challenges so I don’t shame the blood of my ancestors,” he says.
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