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View from the Top: Japan Business Federation

In our series on "View from the Top", we speak to influential figures in Japan's business and economic sectors. The first installment features Sadayuki Sakakibara, who heads the Japan Business Federation, known as Keidanren. Sakakibara has been leading the country's largest business organization since June. NHK WORLD's Akihiro Mikoda asked for his views on a number of economic issues.

Before taking the helm of Keidanren, Sadayuki Sakakibara was CEO for 7 years at chemical fiber maker Toray Industries. He often makes suggestions to Japan's government as a member of the Council on Economic and Fiscal Policy.

"First of all, I would like to know your views on the state of Japan's economy. Some are saying it hasn't yet fully recovered from the impact of the consumption tax hike in April. Do you agree?"
Akihiro Mikoda / NHK WORLD

"Economic recovery was slow in July and August due to bad weather. But it's been picking up since September, thanks to strong capital investment by businesses, especially large firms. Their investment will continue to be a key factor in facilitating a recovery. Moreover, the employment situation is, and will continue to be, very solid. Therefore, I expect the economy will keep rebounding, though moderately."
Sadayuki Sakakibara / Chairman, Japan Business Federation

Prime Minister Shinzo Abe is examining whether to raise the consumption tax hike again, increasing it from 8 to10 percent. But some argue that this could derail future economic growth.

"Raising the consumption tax must be done to ensure fiscal stability and discipline, a sustainable social security system, and a stronger foundation for economic growth. It's also an international promise, so if Japan fails to honor this pledge, its national prestige will suffer. That would deliver a huge blow to the country's interests. I want to see a bold political decision on this matter. Having said that, I think it's necessary to ensure that another consumption tax increase doesn't halt an economic recovery. I expect the economy will gradually rebound toward December. But the government needs to prepare extra stimulus measures, and effectively implement them to support the recovery."
Sadayuki Sakakibara / Chairman, Japan Business Federation

"It's been said that prices have increased due to Abenomics, but wages have yet to rise. What's needed for companies to be able to raise employee wages?"
Akihiro Mikoda / NHK WORLD

"In this year's spring negotiations between management and workers, wages rose more than 2 percent, and that includes base salaries. That's the largest increase in 15 years. Summer bonuses also jumped more than 7 percent. This is also the biggest rise in 15 years. So, all in all, wages are up sharply, mainly among large companies. Higher wages help to boost consumption and production, creating a favorable cycle. To realize this, I hope there will be an environment for companies to raise wages next year. But this will only be possible if companies can earn enough profits. That's why I've said on various occasions that the government should create such an environment. For example, it needs to implement bold deregulation and reform corporate and other tax structures. Companies will be able to raise wages if the government actively supports them with these measures."
Sadayuki Sakakibara / Chariman, Japan Business Federation

Japan's effective corporate tax rate is far higher than those of Singapore, China and South Korea. Japan's government plans to cut the rate down to the twenties in several years' time, but Sakakibara would like to see that done sooner.

"We want the government to cut corporate taxes by around 2 percentage points starting next year, and then lower it further down to the twenties within no more than 3 years, and eventually lower it to 25 percent several years after that. This would bring it in line with the levels of other OECD nations and neighboring Asian countries. With lower corporate taxes, the vitality and competitiveness of businesses would be considerably strengthened.
So, what's the role of companies? The Japanese economy was in a deflationary period for nearly 20 years, during which its GDP growth was almost zero. Many companies were reluctant to expand their operations. They also experienced the financial crisis triggered by the collapse of Lehman Brothers. In order to steadily foster the Japanese economy, firms should take appropriate risks and actively invest in equipment, research and development to create new growth opportunities. Such an aggressive approach is necessary."
Sadayuki Sakakibara / Chairman, Japan Business Federation

"Last week, three Japanese won this year's Nobel Prize in physics. Are businesses investing enough in research and development?"
Akihiro Mikoda / NHK WORLD

"I think that's a most important area. When I became chairman of Keidanren, I said in my inaugural speech that Japan should remain a technology-oriented nation. With its technological skills, Japan has developed new technology, new products and services, and achieved high economic growth. I think it's vital for Japan to remember its past successes as a technology-oriented nation, and once again show its resolve to be a global leader in developing technologies. I believe that will be a key catalyst behind Japan's economic recovery. The 3 Japanese-born scientists who won this year's Nobel Prize in Physics indeed offer encouragement. Their feat is a result of tenacious research, something that many researchers in other parts of the world had mostly given up on. If more Japanese people take similar approaches, the country would have a chance to be a leader on the global stage."
Sadayuki Sakakibara / Chairman, Japan Business Federation

"When it comes to fully utilizing the potential of all Employees, what's your take on the idea of empowering women, giving them greater roles in the workplace?"
Akihiro Mikoda / NHK WORLD

"Japan's population is shrinking and aging. So, promoting women's advancement in society is essential for implementing growth strategies. That's an important policy pillar for Japan's growth. Business strategies must include making the most of the strength and skills of women, and give more of them front-line roles to enable Japanese firms to survive intense global competition."
Sadayuki Sakakibara / Chairman, Japan Business Federation

Sakakibara visited China last month and met the country's Vice Premier Wang Yang, who's in charge of economic issues.

Wang indicated his expectation that high-level economic dialogue between ministers of Japan and China would resume soon.

"I think Wang's call for the resumption of high-level economic dialogue is a very important message that China is sending to Japan with a clear intent to improve bilateral relations. I take it as a significant message that shows China's willingness to improve ties by strengthening business relations. Economic relations between Japan and China have deteriorated. China's trade with its global partners is expanding, but not with Japan. Bilateral trade -- both exports and imports -- are declining. We're very concerned about the plunge in trade, and Chinese leaders share these worries. The current strained political and diplomatic relations between Japan and China is having a negative effect.
We visited Beijing with the aim of improving bilateral ties through greater economic exchanges. And I think we were able to produce substantial results."
Sadayuki Sakakibara / Chairman, Japan Business Federation

Relations between Japan and South Korea also remain strained. Sakakibara hopes to play a major role in improving relations.

"Keidanren will hold a joint meeting in Seoul with its South Korean counterpart, the Federation of Korean Industries from late November to early December. We want regular meetings to be held to discuss various key issues and focus in particular on economic alliances.
Our idea is to have Japan and South Korea take leading roles in negotiating economic agreements such as the free trade accord between Japan, China and South Korea and the Regional Comprehensive Economic Partnership, or RCEP. There will be opportunities for people in Japanese and South Korean business circles to exchange views on very important issues. We want to help improve relations between Japan and South Korea by strengthening and deepening bilateral economic exchanges."
Sadayuki Sakakibara / Chairman, Japan Business Federation

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