Exclusive: Abe's Japan reform plan draft leaves tough questions unanswered

Mon Jun 2, 2014 11:46am EDT
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By Takaya Yamaguchi

TOKYO (Reuters) - A draft plan to boost Japanese growth promises to overhaul corporate governance, promote technology and attract private investment, but it leaves many of the toughest questions unanswered as the country seeks to claw its way out of a crippling cycle of deflation.

The 60-page draft outline of Prime Minister Shinzo Abe's growth strategy reviewed by Reuters, which has not been made public, gives no details of how and whether the government would cut the corporate tax rate.

Nor does it detail plans to overhaul the nation's public pension fund, known as GPIF, another of the most closely watched policy measures for investors in Japan's stock market.

Other unanswered questions include whether corporations will be allowed to own farmland and whether companies will get reforms of the labour arbitration process to make it easier to dismiss workers.

Both of those controversial issues are marked as pending in the still-evolving policy draft.

The document does not mention whether Abe's government will push for legalizing casino gambling in Japan, a step that proponents say could drive up tourism and tax revenues in Tokyo and elsewhere.

The draft plan was compiled by government ministries and will form the basis of Abe's "third arrow" reform update due to be announced later this month.

Abe's growth plan is aimed at lifting the potential output of an economy that has been mired in deflation since the late 1990s, coupled with an aggressive program of quantitative easing by the Bank of Japan and an earlier round of fiscal stimulus.   Continued...

Japan's Prime Minister Shinzo Abe attends a news conference at his official residence in Tokyo May 15, 2014. REUTERS/Toru Hanai