More focus on people in a changed Japan

TERUHIKO MASHIKO, Japan's senior Vice Minister of Trade, Economy, and Industry, told me the other day that his country, the world's second-largest economy, was witnessing a sea-change.

Mashiko is also a member of the House of Councillors under the banner of the ruling Democratic Party of Japan (DPJ), which won the August elections by a landslide. The DPJ victory ended the more than 50-year dominance of the Liberal Democrat Party in post-war Japanese politics.

The veteran politician with three House terms prior to his latest Upper-House win, said the new DPJ-led administration will attempt to usher in a new era in Japan.

In this context, Japan is moving closer to the centre of the political spectrum or even slightly towards the left.

For example, it has been pushing for the formation of an East-Asian Community, consisting of the Asean, Japan, China, South Korea, India, Australia and New Zealand.

Yet, Mashiko emphasised that US-Japan relations remained an axis of Tokyo's foreign policy. For the past five decades, US-Japan relations have been predominant, but it remains unclear if the proposed East-Asian Community will still give US the same prominence.

Domestically, the DPJ-led government has adopted more people-centric policies in the wake of the Lehman Brothers crisis in the US. The crisis has affected the Japanese economy badly because its export machinery depends very highly on US consumption.

To cope with economic hardship, the government has announced a plan to give Japanese families a per-child allowance of ¥26,000 (Bt9,570) per month so as to make it easier to raise kids amid their declining income.

In addition, it will make high-school education free so as to help reduce the financial burden on the parents, and cut petrol tax in order to put more disposable income in the pockets of the population.

The first two measures are intended to help address the issues of an ageing population and Japan's low birth rate.

At present, nearly 20 per cent of the total population is 65 years of age or older. With a declining birth rate and a longer life span, there will be fewer and fewer active workers to support senior citizens in the future. So something has to be done to slow or reverse this demographic trend.

Apart from this, Mashiko said the DPJ government will also boost Japan's target of cutting down greenhouse gases by 25 per cent by 2020 as a goodwill gesture to the world community which is fighting the global-warming issue.

Raising the bar on emissions will also help increase the competitiveness of Japan's energy-saving and green industries in the global market.

DPJ is also committed to shaking up the relationship of the government, bureaucrats and big industries or Japan's so-called iron triangle so the government can provide more direct income support to households and farmers.

The new strategy comes hot on the heels of the near-collapse of export demand, which used to be the key engine of Japan's economic growth.

In other words, Japan is re-prioritising its national agenda by placing a greater emphasis on the people rather than on big businesses and industries. This means that large-scale public schemes will be revised or suspended as the government channels more public funds into child care, education and small and medium-sized enterprises.

Some of the new government's measures are more oriented towards welfare and redistribution of wealth. This could lead to higher disposable income and higher domestic consumption to support a domestic-led economic growth, even though the economic multipliers will be less than those of large-scale construction projects.

Previously, large-scale public schemes were often used to stimulate growth but such a policy no longer works.

So keep your fingers crossed for a new Japan.