Weekly News from Tokyo

DITP TOKYO (2013 April13 – April19) Weekly News From Tokyo 7 Jun. 2014 ~ 13 Jun 2014 (No.201423) TOKYO SKY TREE TOKYO SKY Gov't panel proposes deregulation measures for growth strategy TOKYO (Kyodo) -- A government panel tasked with regulatory reform on Friday came up with some 230 deregulation measures with the aim of revving up Japan's economy through medical, employment and farm reforms. The proposals submitted to Prime Minister Shinzo Abe will be reflected in the government's new growth strategy to be compiled on June 27. In its recommendations, the Council for Regulatory Reform headed by Motoyuki Oka, adviser to Sumitomo Corp., stressed the importance of reforms that would give people more options. In the medical sector, the panel called for an expanded system of medical treatment combining insured and uninsured services based on patients' requests. Japan has permitted a total of 94 uninsured advanced medical treatments to be combined with insured treatments, mainly for research purposes. The proposed deregulation seeks to allow patients to receive such advanced treatments within some two weeks of requesting them. It also aims to increase the number of medical institutions where such treatments are available. For cases using unapproved drugs, the panel called for shortening the approval time to about six weeks from six to seven months at present. As employment-related deregulation measures, the panel proposed promotion of a merit-based pay system under the so-called white collar exemption system, which makes it possible for employers to pay some workers not for how long they work but for what they achieve. It also called for the introduction of a system that obliges companies to ensure that workers take all their holidays. In the farm sector, the panel urged stepped-up efforts to reform Japan's agriculture over the coming five years. It called for an overhaul of the Central Union of Agricultural Cooperatives, the umbrella 1 DITP TOKYO (2013 April13 – April19) Weekly News From Tokyo 7 Jun. 2014 ~ 13 Jun 2014 (No.201423) TOKYO SKY TREE TOKYO SKY organization for agricultural cooperatives around the country, known as JA-Zenchu, so that local cooperatives would be allowed to run their business more freely. The council also proposed transforming the National Federation of Agricultural Cooperative Associations, known as JA Zen-noh, into a stock company in the future. JA Zen-noh markets the agricultural products of its cooperatives. In addition, the council said the restriction on private firms' ownership in agricultural corporations should be eased to less than 50 percent of their voting power from up to 25 percent at present to encourage newcomers. (Nikkei: June 13, 2014 10:12 am JST) Japan to pledge cutting corporate tax rate below 30% TOKYO -- Japan's government will stipulate plans to slash the nation's effective corporate tax rate to below 30% in economic policy guidelines due out this month, making a public pledge to start the reduction next fiscal year. Akira Amari, minister of state for economic policy, and Takeshi Noda, head of the Liberal Democratic Party's tax commission, reached an overall agreement Thursday to bring down the top effective rate of 35.64% in Tokyo to the 20% level within several years. After discussions with Finance Minister Taro Aso on Friday morning, the proposal will be included in draft policy guidelines to be presented at a meeting of the Council on Economic and Fiscal Policy later that day. The business community wants to see the rate go down by 10 percentage points, bringing it in line with those of such countries as China and South Korea. The LDP's tax commission and Finance Ministry contend that the cut should be limited to around 5 percentage points. The final rate has been left vague for now. The agreement is also ambiguous about funding for the cut, which has been a point of contention. It will state that the government "will secure permanent funding sources in light of the effects of Abenomics," but will not offer details. Each 1-percentage-point decrease in corporate taxes will reduce revenue by some 500 billion yen ($4.85 billion). A 5-percentage-point cut would require 2.5 trillion yen in funding, while 2 DITP TOKYO (2013 April13 – April19) Weekly News From Tokyo 7 Jun. 2014 ~ 13 Jun 2014 (No.201423) TOKYO SKY TREE TOKYO SKY a 10-point cut would need 5 trillion yen. The LDP tax commission and government tax authorities, concerned about Japan's fiscal health, have argued for a revenue-neutral plan that would make up the difference through such steps as repealing targeted tax breaks and imposing levies on money-losing companies. While Amari and the business community agree that government finances must be considered, they have sought to allow the increase in tax revenue from the economic recovery to be used as a funding source. The agreement is expected to include language acknowledging the government's goal of eliminating the primary balance deficit by fiscal 2020, serving as a deterrent against an unfunded cut. Meanwhile, the phrase "in light of the effects of Abenomics" leaves room to use revenue increases for making up for the loss. The government's corporate tax reform efforts are aimed at reducing a rate that is higher than those of major Asian and European countries in hopes of making Japan more competitive and attracting foreign investment. The agreement marks a step toward this goal but puts off the details until tax revisions are discussed at year's end. How low the tax will go, and over what period of time, will depend on how much funding can be found. Size-based corporate taxes face heavy opposition, chiefly from small and midsize companies, and reductions to industry-specific tax breaks have been resisted by the business community. If the government implements an unfunded tax cut of several trillion yen, it will be forced to slash annual expenditures or issue more bonds. (Nikkei: June 13, 2014 5:26 am JST) Japan April core machinery orders fall 9.1% TOKYO (Dow Jones) --Japanese core machinery orders fell 9.1% in April from a month ago, the government said Thursday, an indication that companies are likely keeping a close eye on the effect of a sales tax increase on the economy before committing to further outlays on equipment. The fall was smaller than expected by economists surveyed by The Wall Street Journal and the Nikkei, who estimated on average that core orders decreased 11.0% from March. 3 DITP TOKYO (2013 April13 – April19) Weekly News From Tokyo 7 Jun. 2014 ~ 13 Jun 2014 (No.201423) TOKYO SKY TREE TOKYO SKY Unadjusted core orders rose 17.6% from the same month a year earlier. The government said the fall in orders from the previous month was due to a decrease in demand from the manufacturing sector. Core machinery orders in March reached their highest volume level since June 2008, largely on one-off orders in the transport, aircraft and computer industries. Machinery orders are widely regarded as a leading indicator of corporate capital investment. The core figure excludes orders from electric power companies and those for ships, which are often a source of volatility in the overall data due to their large sizes. (Nikkei: June 12, 2014) Japan to take in more foreign labor for elderly care, retail Photo: Filipino nurses study Japanese in preparation for working in Japan. TOKYO -- The Japanese government will seek to bring in more foreigners able to work in elderly care and retail store management, in addition to attracting workers with highly specialized skills. The Industrial Competitiveness Council, chaired by Prime Minister Shinzo Abe, on Tuesday recommended overhauling the training program for foreigners and improving Japan's ability to take in individuals with highly specialized knowledge. These provisions will go into the growth strategy to be compiled this month. A private advisory panel to Justice Minister Sadakazu Tanigaki suggested two changes: increasing the maximum period of the existing training program from three years to five or so, and expanding the scope to include such sectors as nursing care for the elderly; forestry; auto repair; inventory and personnel management in retail; and cooked-meal production. Currently, the program covers manufacturing, construction and agriculture, among other fields. To ensure that trainees are not forced to work under unsuitable conditions, penalties for violators will be strengthened. 4 DITP TOKYO (2013 April13 – April19) Weekly News From Tokyo 7 Jun. 2014 ~ 13 Jun 2014 (No.201423) TOKYO SKY TREE TOKYO SKY The targeted sectors tend to lack labor. For example, Tokyo home nursing care provider JICC struggles to secure enough part-timers for weekend and holiday night visits even though it pays as much as 2,800 yen ($27.06) an hour. Currently, based on economic partnership agreements, qualified Indonesian and Filipino citizens are allowed to work in Japan as nursing care providers. But over the past three years, only 242 individuals have passed the national exam for obtaining the qualification. The government will now consider opening up the program to those from countries that do not have EPAs with Japan. Individuals from such countries would be able to work by obtaining the necessary qualifications in Japan. Under a separate program, a new visa category will be created for employees of Japanese companies' overseas operations. And for individuals with highly specialized skills, such as corporate managers, engineers and researchers, the government will likely make it easier for them to bring along someone to help with household chores. The change will apply in the six national strategic special zones in Tokyo, Osaka and elsewhere. Limiting the initiative will enable the government to alleviate the social impact while working to smooth out the challenges that come with increasing foreign labor.

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