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Hatoyama – Prepared to make his own decisions
Florence Chong, Editor, ATI Magazine
11-01-2010
ATI ASIA2010 Magazine
WASHINGTON — The victory of the Democratic Party of Japan in September was heralded around the world as the end of an era in Japanese politics.
After more than five decades, Japan’s Liberal Democratic Party (LDP) was swept away in a tide of voter disenchantment. Since the maverick — but highly popular — Junichiro Koizumi stepped down in 2005, Japan has had three Prime Ministers – each lasting a year in office.
The big question now is: will Yukio Hatoyama, who comes from a family steeped in politics, and who won decisively, beating the hapless Taro Aso, usher in a period of stability? And, importantly, how long will he last in the nation’s top job? Indeed, will his Government have the depth and experience to keep Japan on track for recovery from the global crisis?
The DJP won 308 of 480 seats in the Lower House of the Japanese Diet, close to three times the number it had at the last election.
Bryce Wakefield, Programme Associate, Asia Programme, at Woodrow Wilson International Centre for Scholars in Washington, says Hatoyama has picked some excellent people for senior positions, without exacerbating reported rifts between his party and his Coalition partners.
Wakefield, a specialist on Japan, says the notion that the DPJ is being fractionalised or divided is not particularly accurate. If anything, he says, the last election pointed to a stronger tendency towards unity. Contrary to expectations, Ochiro Ozawa, who stepped down as Opposition leader in May over corruption charges – and is now Secretary-General of the DPJ — appears to have been sidelined from making Cabinet decisions.
Hatoyama seems to have put his imprimateur on his own Cabinet, appointing highly competent individuals like Katsuya Okada as Foreign Minister and Hirohisa Fujii as Finance Minister. Wakefield says those suspected of being “flaky” have been marginalised.
He says Deputy Prime Minister Naoto Kan, a former Health Minister, has been appointed to set up a new Office of National Strategy, with a brief to set out a broad economic strategy for Japan.
Under the Liberal Democratic Party (LDP) Government, a unit known as the Policy Research Council played a key role in making Government
policy. But, under that system, people in the party, and outside the Cabinet, were suspected of colluding with bureaucrats to make policy.
The DPJ wants to eliminate this practice, through the National Strategy Office, says Wakefield.
But he is not sure how much of Government policy is going to be made by this Office. He says the rationale for having the Office is to have an institution which has the ability to establish the Budget and create policy away from the Ministry of Finance, which has traditionally sought to intervene in all sorts of areas.
In future, MOF will be responsible for establishing detail for the Budget. “Of course, all this is my take of what is going on. We don’t know how this is going to work until they actually come to handing down the 2010 Budget,” he told ATI.
Wakefield says Hirohisa Fujii understands the pressing economic issues facing his country. He is known to be concerned about the indebtedness of the Government. Wakefield adds that Fujii’s appointment signals that Hatoyama is prepared to make his own decisions – even if these conflict with what Ozawa might want (there is reportedly bad blood between Ozawa and Fujii). Hatoyama is not known as an economic manager, but does
he trust Fujii.
Fujii, 77, was Finance Minister briefly (for 10 months) in the 1990s. He is the head of the DPJ’s tax panel, and has called for funding of Japan’s social welfare costs through consumption tax revenue. He also wants to discuss over the next four years the issue of raising sales tax.
Edward Lincoln, Professor of Economics and Director of the US-Japan Business Centre at New York University, says the central plank of the DJP election platform was the restoration of pensions to millions of Japanese.
The saga of lost pensions began in 2007, when details of 50 million Japanese pension files went missing. This was seen as a key reason for the undoing of the Liberal Democratic Party (LDP), leading to the historic change of Government to the DPJ.
With records missing, details wrongly entered into the system — and several incompatible systems to combine — those employed before 1997 now face a hugely-complicated bureaucratic paper chase to claim what is rightfully theirs. “Pensions is the big issue that will make or break the DPJ. One reason it got into office is the pension scandal,” says Lincoln. “Everyone is Japan is concerned about the pension issue. Every record is done by paper, unlike the US, where it is not possible to make such a mistake, as Americans are issued with a social security number.”
In Japan, many employees make their own payments. Lincoln says the Hatoyama Government has promised to pay the full pension. But this election promise is fraught with practical problems of identifying those who are entitled to it — and to prevent fraud. “If the Government can honour this election promise, it will be in good shape,” says Lincoln.
There is concern that some of the anti-reform elements within the Government may backtrack on some reforms initiated by the Koizumi Government. For example, Japan made major revisions to its outdated Corporation Law in 2005. Among other things, it put in place rules increasing the accountability of these legally responsible on a Board.
Another problem facing the Government is labour and employment. Most employees have full-time, regular jobs. The courts have said that Japanese companies must prove that they have exhausted all possibilities before they can retrench employees. Literally, they have to be on the verge of bankruptcy.
This protection does not extend to temporary or part-time employees. Since the 1997-98 Asian financial crisis, one-third of the workforce has been made up of casual workers, and the current downturn has highlighted the plight of these workers. Laying off of workers has always been a controversial issue, with the prevailing view that it is unfair or “unJapanese” to do this. Lincoln says that even the previous LDP Government was worried about this. The DJP has said it intends to offer temporary and part-time workers the same degree of security — or, alternatively, it could move to prohibit the hiring of temporary workers.
Lincoln says the Japanese economy is doing fine. On the plus said, he says, is the Japanese emphasis on education. “The last time I looked, 16 to 17 per cent of all undergraduates in Japan were in engineering, compared with five per cent in the US.” He says that if the Japanese stick to manufacturing, “they will do fine”.
But Japanese manufacturers face a lot of competition from other countries – China, Korea, Taiwan, the US and the EU.
Hatoyama has been talking up climate change, but Lincoln expresses his concerned that the new Prime Minister is making the assumption that Japan can play a leading role climate change. Japan was a leader in solar technology, but that was a decade ago. It has been overtaken by China, the US and the EU. China has emerged as a clear leader in solar technology. Similarly, Japan does not figure in wind technology.
That said, Lincoln says the worst is over, and he expects the Japanese economy to keep growing. The question is: Over the next year, how rapidly will it grow? |
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