Japan schedules new program to solve economic problems

Japan schedules new program to solve economic problems

Being the world's second largest, Japanese economy,is still facing severe challenges widely seen as the worst economic crisis since the World War II, and need to be renewed thoroughly according to many experts. Radical changes are looked for immediate solutions to cure the troubled banking system currently bringing in bad loans, and to avoid the growing national debt amounting to the 130 percent of the gross domestic product and the deflation. For an Economic Revitalization Council on Economic and Fiscal Policy on its latest statement emphasizes its effort to cope with these challenges and to forge new rejuvenating paths for the economy. A structural reform policy for macroeconomic balances has recently been announced by the Cabinet office. The main conflict arises from the profile of the country, 10 percent being capitalist and the remianing 90 percent socialist. The government inclination to protect the domestic manufacturers and services for ages has not been changed and a new more international strategy needs to be developed for overcoming these problems. A brand new structural reform supporting free competitiveness would accelerate the economy. A different opinion is defended in a current Time report, points out to the fact that idle workforce in Japan is also another important burden. Export industries, mainly automotive, electronics and computer hardware are, despite being 20 percent more productive than the global benchmark, only amount to one tenth of Japan's work force and GDP. Rest of the Japan's work force is not seen that productive in the industrialised world. As a consequence, the inefficient workforce compared to that of other important world economies, create a big burden for the nation's economy. As a result, economy experts see a structural reform and removal of government barriers to free competition in the domestic market as a must in order to enhance efficiency. According to a recent statement by Prime Minister Koizumi, for revitalising the Japanese economy through sustained private sector-led growth, it is imperative to implement structural reform through "financial system reform," "tax reform," "regulatory reform" and "expenditure reform" in an integrated and coordinated manner. However, he emphasizes that such target cannot be achived in a short while. The government aims to resolve the non-performing loans problem and apply structural reforms within the coming two to three years of time, coupled with intensive adjustments for recovering the Japanese economy. Low economic growth is expected in the short run, however after this adjustment period, current economic weaknesses is believed to be overcome and growth that is driven by private-sector demand and spontaneous economic incentives are planned to be achieved. Along with this recovery process, fiscal reform will be carried out. As a second step, plans include to monitor the major banks for their progress in clearing their non performing loans off their balance sheets, making use of new indicators. Thirdly, disposal of non performing loans will be facilitated by the Resolution and Collection Corporation (RCC), whose functions will be further strengthened in securitization and business restructuring of viable debtor companies. Fourth step is scheduled to provide employment measures to guard against the unwelcome side-effects of disposing of non performing loans. It is planned to create employment opportunities in new sectors. Mobility in the labor force will be encouraged by supporting self-education community colleges as well as through an occupational ability assessment system, by deregulating temporary personnel markets, and by improving safety nets such as assistance of housing loans and educational burdens for those who are without jobs. And finally it is aimed to construct a stable financial system suitable for the 21st century by emphasizing the flow of funds through direct finance, and by achieving banking reforms that will limit the risks of shareholding among banks.