Japan Economy Chief Amari Faces Surgery With Reforms Undone

Japan’s economy chief will undergo surgery for cancer as soon as next week, casting a cloud over the future of a politician charged with crafting plans to revamp industrial regulation and liberalize trade rules.

Akira Amari, 64, told reporters in Tokyo yesterday that he has been diagnosed with an early stage of tongue cancer, and submitted his resignation only to see Prime Minister Shinzo Abe reject it. Amari has served as Abe’s point man for the growth-strategy pillar of the government’s campaign to end two decades of economic stagnation.

Amari’s deputy, Yasutoshi Nishimura, will represent Japan in trade talks starting tomorrow with countries including the U.S. and Vietnam. The development came on the eve of the final gathering of parliament for the year, a session that saw Abe hold off from corporate income-tax cuts or nationwide labor deregulations that economists have advocated to stoke growth.

“The growth strategy is being produced collectively by bureaucrats and politicians so even if Amari is away from the central arena of political decision-making for a while, the impact will be quite limited,” said Kiichi Murashima, chief economist at Citigroup Inc. in Tokyo. “The biggest problem in the Abenomics growth strategy is that it’s not clear what Prime Minister Abe wants to implement at this point.”

The Nikkei 225 Stock Average was up 0.3 percent at 10:05 a.m. today, having closed Dec. 3 at its highest since December 2007. The yen was down 0.1 percent at 101.93 versus the dollar.

Recovery Period

After the operation, Amari said his doctors told him he will need two weeks in the hospital, and then a week or two of rest at home before he can return to work.

Amari was hospitalized on Dec. 2, a day after meeting with U.S. Trade Representative Michael Froman for talks on the Trans-Pacific Partnership trade pact.

Abe and Bank of Japan Governor Haruhiko Kuroda, speaking yesterday about the same time as Amari, projected confidence in their reflation efforts. The prime minister said policy makers will make the economy even better next year and Kuroda said the economy is on track as forecast, moving towards the central bank’s 2 percent inflation target.

The cabinet yesterday approved an 18.6 trillion yen ($182 billion) economic package to cushion the economic blow from a sales-tax increase next April. The package includes 5.5 trillion yen in spending and the government projects it will boost real gross domestic product by about 1 percent and create about 250,000 jobs.

Among the deregulation agenda items waiting for 2014 is identifying the locations for special zones that will enjoy reduced regulation.

“The prime minister will need to set out a clear policy in December-to-February before the various government ministries and agencies consider policies for the following year,” UBS AG economist Daiju Aoki wrote in a research note this week. “We hope to see further deregulation in areas such as special economic zones, the labor market, health-care, nursing and agriculture.”

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