Japanese Economic Czar Stresses Urgency of Reforms

Heizo Takenaka in conversation with Mary Kissel, Editorial Page Editor, The Wall Street Journal Asia

Heizo Takenaka addressing the Asia Society Hong Kong Centre on July 23, 2008. (Asia Society Hong Kong Centre)

HONG KONG, July 23, 2008 - Respected Japanese economist Heizo Takenaka says more wide-ranging economic reforms are needed in his country to counter the rapidly aging population. Speaking to the Asia Society Hong Kong Center, the former Minister for Economic and Fiscal Policy said it was vital for his country to create a small government like Hong Kong’s. Otherwise, he warned, the tax burden on the younger generation could conceivably become huge and curb Japan’s potential for growth.

Currently Director of the Global Security Research Institute at Keio University, Takenaka urged Prime Minister Yasuo Fukuda to adopt a radical three-point strategic agenda that includes a cut in the 40 percent corporate tax rate; the expansion and internationalisation of Haneda Airport (one of the world’s top five busiest airports); and the privatisation of Tokyo University.

He expected the controversial privatization of Japan Post (the biggest public enterprise in Japan, employing nearly 400,000 civil servants), to continue under the current Prime Minister despite ongoing resistance from certain political quarters. (While serving as a core member of Junichiro Koizumi’s cabinet, Professor Takenaka spearheaded the break-up of Japan Post and helped turn around the nation’s ailing economy.)

He described Prime Minister Fukuda as a “reformer” who is unfortunately surrounded by “irresponsible” ministers and advisors. However, Takenaka was confident that some degree of political realignment was possible whereby reformers within the ruling Liberal Democratic Party and the opposition Democratic Party would join forces to create a reformist party.

Takenaka believed the Japanese economy was not at risk of a new crisis, despite the ongoing troubles plaguing the United States.

Excerpt: "I'm not pessimistic" (3 min., 21 sec.)