TOPICS Deputy BOJ Chief Named Governor Top Central Bank Post Left Empty Temporarily By Hiroshi OKABE

he seat for the Bank of (BOJ) the largest opposition group, rejected the take could trigger a global crisis, the new T governor, who steers monetary policy two nominees for the reason that fiscal top central banker is required to steer mon- and is called the guardian of the currency, policy should be separated from monetary etary policy in a tough-minded manner. was left vacant temporarily for the first policy. Amid the global stock market decline time in postwar Japan. Although the gov- Nominees for the BOJ governor and since last year, share prices in Japan have ernment nominated two people to replace some other key posts are subject to Diet posted sharper drops than those in the BOJ Governor Toshihiko Fukui days before approval. Any nomination can be nullified United States where the subprime mort- the expiry of his term of office in mid- by disapproval by either of the two Diet gage crisis has originated or than those in March, the opposition camp, which con- chambers. The brief vacancy of the central Europe where financial institutions have trols the House of Councillors, voted bank governorship indicates Japan’s key incurred heavy losses in the aftermath of against both nominees. While the govern- political problem. This means that no the crisis. Foreign investors have reported- ment failed to appoint a new governor, major policy decision can be done under ly criticized Japan for failing to make Deputy Governor Masaaki Shirakawa the staggered combination of the House of progress in structural reforms and became acting governor to launch a new Representatives dominated by the ruling Japanese firms for closing themselves to BOJ leadership. Shirakawa was eventually camp and the House of Councillors con- foreign investment by introducing defen- named to the top post of governor three trolled by the opposition, although the sive measures against unsolicited takeover weeks later to fill the unprecedented vacu- Lower House can overrule the Upper House bids. Japan should show the rest of the um. But confidence in Japan has been with a two-thirds majority vote over most world that it now has a new central bank damaged. “Japan’s Parliament voted down other matters. Business leaders once gave chief who is respected not only domestical- the government’s latest nominee for the strong warnings about the vacant central ly but also globally. This is a key step to next governor of the Bank of Japan, leaving bank governorship. “The vacancy of the dispel foreign doubts about the Japanese the central bank without a skipper at a time top Japanese monetary policy post could economy. when the global financial crisis is escalat- lead the rest of the world to doubt Japan’s ing,” The Wall Street Journal reported after credibility,” said Fujio Mitarai, chairman of TO READERS the second candidate was rejected. the Japan Business Federation, a powerful We welcome letters of opinion or The government first nominated BOJ business lobby known as Nippon comment from our readers. Please Deputy Governor Toshiro Muto for the Keidanren. “The vacant BOJ governorship include your full name and address, position. After the Upper House rejected can be taken as a message affecting and send your letters to the Editor. Muto, the government replaced the nomi- Japan’s international responsibility,” said Japan Economic Foundation nee with Koji Tanami, governor of the Tadashi Okamura, chairman of the Japan 11th Floor, Jiji Press Building, Japan International Cooperation Bank. Chamber of Commerce and Industry. 5-15-8 Ginza, Chuo-ku, Both are former vice finance ministers. In Shirakawa, who has been abruptly pro- 104-0061 Japan the world, it is not unusual for former top moted to the governership, is a theory-ori- Fax: +81-3-5565-4828 bureaucrats of fiscal authorities to head ented central banker who has long engaged E-mail: [email protected] central banks. Muto was BOJ deputy gov- in monetary policy practices at the BOJ. As ernor for five years. Before the BOJ decid- he has offered to take over the basic mone- Letters may be edited for reasons of space or ed to terminate its quantitative credit-eas- tary policy stance from the former gover- clarity. The editor has no obligation to ing policy in March 2006 and its zero inter- nor, the BOJ is expected to make no change acknowledge receipt of a letter or give a est rate policy in July 2006, Muto under- in its policy management. But the BOJ, reason for not publishing it. No inquiries by telephone concerning letters will be accepted. took the central bank’s difficult coordina- which had been tightening monetary policy tion with the government and political lead- to raise ultra-low interest rates, is now in a ers. As head of the Japan International difficult position as the US Federal Reserve Subscribers can access articles from back issues, and selected articles are also available to Cooperation Bank, Tanami has steered offi- has accelerated its monetary easing to non-subscribers on our website at cial development assistance to developing avoid any recession. Under the current http://www.jef.or.jp/journal/index.html countries. The Democratic Party of Japan, tense economic situation in which any mis-

2 JAPAN SPOTLIGHT • May / June 2008 TOPICS Leaving No Stone Unturned Photo: Kyodo News Department Stores Courting Non-Japanese Shoppers

ajor Japanese department stores, which drive home the impression that Takashimaya M have been hobbled by Japan’s declining is a “foreigner-friendly” store. and aging population, are stepping up sales Takashimaya, of course, is not the only efforts targeted at Chinese and other over- player in this “make foreign shoppers feel at seas tourists. The Japan Department Stores home” game. At Matsuzakaya’s Ginza store, Association, for instance, has drawn up employees practice Chinese greetings – nin- A Chinese woman interpreter of Takashima- guidelines on interpreter services and how-to hao (hello, how are you), qingshaodeng ya helps compatriot manuals for sales clerks when addressing (please wait a moment) – during customary tourists do shopping. shoppers from abroad. The aim, of course, is morning pep-talk sessions before the opening to create a friendly atmosphere for foreigners time. Greetings apart, Matsuzakaya is also “Great Wall” mark. to shop in Japan. trying to draw in foreign group tourists not According to the Japan National Tourist At the Takashimaya department store in only to its top-brand merchandise and cos- Organization, the number of overseas visitors Tokyo’s , which has a fairly large metics but also to kitchen ware, wine and a to Japan in 2007 topped the 8 million mark number of overseas visitors, there are about wide range of other products. As still for the first time ever, rising 13.8% to 10 Chinese and English interpreters at work. imposes foreign-currency restrictions for 8,349,000. The number of foreign tourists, At its five other stores, including those in overseas travel, Matsuzakaya is stepping up particularly from Asian countries, has been and , Takashimaya has prepared efforts to make it easier for Chinese shoppers rising steadily. To Japan’s struggling depart- 5% shopping discount coupons targeted to pay such as installation of terminal devices ment stores, which have seen their combined mainly at tourists from Asian countries. The that can handle more than 10 types of Yinlian turnover decline for 11 straight years, foreign management, in short, is working hard to debit cards carrying the Bank of China’s tourists may very well be their savior.

Photo: Kyodo News Quits HD DVD Business Selection & Concentration” Strategy Clear

oshiba Corp. has announced withdrawal cussions in its wake. One is the pros and T from the HD DVD business, abandoning cons of the format war. In Japan, consumers its technology for next-generation DVDs after were thrown into confusion two decades ago Models show off a HD DVD recorder from losing a turf war over a high-definition DVD over a videotape format war between ’s which Toshiba has announced withdrawal. format with the rival Blu-ray disk group led by Betamax and Victor Co. of Japan’s VHS. The Sony Corp. and Matsushita Electric Industrial government maneuvered behind the scenes make a dramatic about-face in a short period Co. Toshiba’s defeat is blamed on its failure to help unify next-generation DVD formats. after Warner Brothers made it clear in early to woo the software industry, including However, negotiations for the unification January it was defecting from the HD DVD Hollywood studios. Following Toshiba’s deci- broke down. Toshiba, which began selling camp. At the same time, Nishida decided to sion, Microsoft Corp. has stopped making HD HD DVD players two years ago, has sold strengthen its nuclear power plant business DVD drives for its Xbox 360 video game con- about 700,000 of them worldwide. Although with the purchase of Westinghouse Electric soles, and Paramount Pictures became the Toshiba says it will take all possible measures Co. and substantially increase production of last major US studio to switch from the HD to ensure after-sales service, it was con- “flash memory” computer chips. He articu- DVD format to the Blu-ray disk. As for rea- sumers once again who were tossed up and lated Toshiba’s strategy, withdrawing from sons for quitting the business, Toshiba down by the format war. unprofitable businesses and refocusing its President Atsutoshi Nishida said he had made Another interesting matter is favorable resources on competitive fields. The world “a very painful decision” after concluding that reactions to Nishida’s decision. Japanese business community is watching Nishida’s continuation of the HD DVD business would business leaders have been often criticized next move. deal a heavy blow to both management and for being too slow in making decisions, com- consumers. pared with Western top executives. This Hiroshi Okabe is a business news editor Toshiba’s decision has left a wave of reper- time, however, the Toshiba head decided to at Kyodo News.

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