New business model is Koizumi's
legacy By Suvendrini Kakuchi
TOKYO - Japan's rapidly accelerating
economy is regarded as Prime Minister Junichiro
Koizumi's major contribution as he prepares to
step down in September from the office he assumed
in 2001.
But analysts say the recovery has
created a dramatically changing Japanese economy
and paved the way for a shift from the traditional
focus on a large, affluent middle class to a
highly competitive society, a trend that carries
important consequences
for
all of Asia.
Japan's foreign direct
investment in the member states of the Association
of South East Asian Nations (ASEAN) in 2005
totaled US$3.2 billion, and new free-trade
agreements have been signed between Japan and
several members of the 10-nation grouping, such as
Malaysia and Singapore. ASEAN also includes
Myanmar, Thailand, Vietnam, Laos, Cambodia,
Indonesia, the Philippines and Brunei.
"Economic reform was a priority for
Koizumi. As he prepares to demit office, he leaves
his successor to grapple with new challenges that
have never been on the table before," said Koichi
Ishiyama, a business expert at Tooin University.
Ishiyama referred to a rising wealth gap
in Japan and pointed out that the situation
contrasts with a growing job market - the Ministry
of Health and Welfare reported in July that job
offers have increased 3.5% over last year.
"Japan's postwar growth in the 1970s was
supported by the rise of a middle class based on
uniform values, a system that contrasts with the
current trend where having a job does not
necessarily translate to a high standard of
living," he said.
Under the Koizumi
administration, Japan has undergone a dramatic
transformation through his policy of promoting
fierce restructuring of companies and right-sizing
the government.
The bitterly fought
postal-reform bill that was passed in the diet
(parliament) is a case in point. Koizumi boosted
his popularity when he won the elections over the
bill, ushering in a long-awaited change to
jump-start the economy after the bursting of the
bubble economy in the mid-1980s.
Masami
Morishima, a businessman in his early 40s who
started his own Internet publishing company three
years ago, agrees. "Koizumi's reforms have taught
ordinary Japanese that we need to be able to
develop our own goals rather than depend on our
companies to lead us. We must learn to be
competitive and be respected for our ability,
which is a new concept," he said.
The net
result today is an economy that showed a growth of
3.2% in the fiscal year that ended in April, and a
stock market that rose 66% in three years.
A report by the Japan Institute for Social
and Economic Affairs, a leading think-tank, says
the Japanese economy has recovered thanks to
reforms in labor, finance, accounting and
corporate governance.
The University of
California's Steven Vogel writes in the report
that the remodeled Japan differs from the earlier
version in several ways. For one, Japanese
companies are re-evaluating their long-term
relationships with banks, workers and other firms.
They are also more variable in their practices and
more open to having foreign managers and business
partners.
According to economist and
writer Yosuke Iinuma, the foundation of the latest
growth in the Japanese economy is the
revitalization of the country's major industries,
such as steel, automobiles and electronics, and is
not necessarily due to a flurry of new businesses
that are the real symbols of a strong liberal
economy. For example, Toyota, Japan's largest
automobile company, reported this month a 13.2%
rise in sales and a 40% jump in net profits to
about US$3.2 billion in the April-June quarter.
Established companies cited success in
streamlining personnel costs by giving up lifetime
employment and modernizing to meet global
competition by outsourcing manufacturing to the
United States or cheaper parts of Asia, mostly to
China.
"Japan's new leaders must strive
harder to encourage innovation to create new
industries in such fields as Internet-enabled
services, to create a vibrant job market, which is
the only way to stem rising social disparity,"
said Iinuma.
He said that while some new
Internet firms, such as online shopping companies,
are earning big profits - $1.7 billion in fiscal
2003, up 70% over the previous year - there is
still a long way to go as compared with the US.
Japan, says the Paris-based Organization
for Economic Cooperation and Development, has
13.5% of its population living in relative
poverty, defined as less than one-half of the
median household disposable income.
But
businessmen like Morishima remain unfazed. "There
is no turning back on the new Japan. We have to
learn to survive in a tough global environment."
