Analysis: Glimmer of Japan reform hope among clouds of skepticism

Thu Jan 10, 2013 10:06pm EST
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By Linda Sieg

TOKYO (Reuters) - Doubting politicians' commitment to economic reform is a tough habit for Japan experts to kick, so the air of cautious optimism around the appointments of dynamic CEOs to advise on boosting industrial competitiveness comes as a bit of a surprise.

Prime Minister Shinzo Abe, who returned to power last month after his business-friendly Liberal Democratic Party's (LDP) big election win, has prescribed a potent mix of government spending and easy money to revive a stagnant economy. But critics question whether he will also tackle the more painful structural reforms needed for longer-term growth.

The list of eight CEOs and an academic joining cabinet ministers in a panel to advise on steps for competitiveness, however, has raised hopes that Abe may have a bigger appetite for reform than first thought.

"Clearly, the 'wall of worry' over the next few months is that it's nothing but old-style LDP pork barrel," said Jesper Koll, director of equity research at JP Morgan in Tokyo. "But he's picked people from leading Japanese companies, old and new, with proven records of strong competitiveness in highly competitive industries. Will he dare tell them it was all for show? It's highly unlikely."

Among those tapped for the advisory panel are Hiroshi Mikitani, 47, CEO of e-commerce operator and Inc rival Rakuten Inc; convenience store chain Lawson Inc CEO Takeshi Niinami, 53; and construction equipment maker Komatsu Ltd Chairman Masahiro Sakane, 72, ranked by Harvard Business Review among the top 20 global CEOs in 2009.

Mikitani, for one, has been an outspoken critic of Japan's 'old guard' business leaders, dropping out of the biggest lobby Keidanren and starting his own rival group.

"My mission is to contribute to creating a framework that makes it easy to start venture businesses," local media quoted Mikitani as telling reporters, mentioning tax breaks and other steps.

Also included is academic Heizo Takenaka, an ex-economics minister who served as then-premier Junichiro Koizumi's reform czar during the latter's 2001-06 tenure and the arch-nemesis of many LDP politicians for favoring reforms that would hurt the interests of some of their staunchest supporters. Takenaka has also criticized Abe's plan to boost public works in light of the country's massive public debt, now more than twice the size of its economy.   Continued...

Japan's Prime Minister Shinzo Abe bows he leaves a news conference at his official residence in Tokyo January 11, 2013. REUTERS/Issei Kato