Japan has unveiled further reforms to revitalise the country’s economy and restore its global competitiveness.
They include phasing in corporate tax cuts and a bigger role for women and foreign workers.
But Prime Minister Shinzo Abe did not announce the sweeping economic overhaul many had expected, and economists point out he faces major resistance to change from Japan’s business world and bureaucrats.
Abe himself accentuated the positive saying: “Rising corporate revenues are leading to more jobs and higher wages. It is this sort of positive cycle that is starting to emerge.”
One important reform measures is a cut in corporate tax, promised for next year, to below 30 percent from the current level of over 35 percent – among the highest in the world.
The US is higher with 35 percent federal tax, plus what states levy. In France the level is 33 percent and in Britain it is 20 percent.
Abe’s package includes steps to increase the number of highly skilled foreign workers, and expand a controversial foreign trainee programme, which has been accused of exploiting participants.
As well as foreign workers, Japan needs to encourage greater investment from abroad. It is falling behind other Asian countries, such as Singapore.
Japan’s government is also urged the nation’s business leaders to do more to boost the role of working women. That is seen as vital due to the shrinking workforce in one of the world’s most rapidly ageing societies.
Another aspect of the growth strategy is the boosting of productivity through a “robotic revolution”, but experts have warned that even with automated aid it will take years for Japan to achieve the necessary growth.
“Even after the government growth strategy is announced, various legislation must be enacted and it will take time for companies to begin to act. Therefore, it will be 10 to 20 years before the potential growth rate rises,” said Kenji Yumoto, vice chairman of the Japan Research Institute.
Yumoto said it was possible, but very difficult, for Japan to hit the 2 percent growth level the government says is needed to reduce its mammoth public debt.
This was the so-called “Third Arrow” of Abe’s strategy to revitalise Japan. The first two “arrows” are massive monetary easing, which has helped push up asset prices, and government spending to stimulate demand.
with Reuters and AP