Sunday, December 13, 2009 – Osaka, Japan
Today, Japan’s leading newspaper specialized in economy/business and politics, reported that Japan stock market is still in the plunge when stock prices are at high level worldwide. Japan is the only country whose stock price fluctuation ratio is minus since end of this August (timing of General Election) among 20 major countries and regions. This is said to attribute to high yen, increase in capital investment and investors avoiding to invest in Japan stock from suspiciousness on management of the economy by Hatoyama administration. The Nikkei Stock Average has recovered to over 10,000 yen after having once plunged to far below 9,000 yen at the lowest, but compared to other stock market, it is prominent that Japan stock price has not been recovering sufficiently.
1. Stock prices of countries and regions excluding Japan and Italy have been on the rise since September in line with worldwide economic recovery.
Since the General Election in end of August, The Nikkei Stock Average dropped by 3.7% as of December 11. It has once declined by 13.4% in the end of November due to drastic high yen. On the other hand, stock prices of other major countries have been firmly improving since September with bottom-out of worldwide economy. Italy’s stock price has remained almost constant since September but all others have been rising; +27% for Russia, over +20% for China and Brazil, and the U.S has been steadily improving with approximately +10%.
2. There are several reasons for plunge in Japan stock price.
The first reason is drastic high yen. Since Japan relies much on export-oriented industries, this has huge negative impact on the Japanese economy.
The second reason is many companies have been issuing many new stocks to increase capital and enormous amount of share of stock were supplied to the stock market, leading to dilution of outstanding stocks.
The third reason is uncertainty of government’s economic policy, leading to negative impact on market psychology. Immediate execution of countermeasures for deflation and high yen is critical but Hatoyama administration has other issues such as political donation and transfer of Futenma airbase, and some experts in economy are worried that the priority of economy under Hatoyama administration might be not so high. In addition, finalizing 2010 budget is taking time because the administration is having a tough time in reducing request of budget allocation. With this, on December 11, in bond market, long-term interest rate rose because of the laxing fiscal discipline, and in the stock market, many experts view that the Hatoyama administration has not yet developed long-term growth strategy.
3. Current situation needs to be improved immediately.
Under the severe current situation, Japan needs economic measure to be implemented immediately. Expectation of mid/long-term economic growth of Japan is shrinking among overseas investors. And with ongoing deflation as mentioned in the previous article "How Japan Get Out From 10 Year Deflation?", Japan’s GDP is at one of the lowest level in 19 years.
Under ongoing deflation situation, it would be difficult for companies to increase revenue and profit, and stock price tends to decrease as well. An expert in stock market comments that overseas investors are likely to avoid investing to countries that are going through deflation. And according to a survey executed by the U.S. Merrill Lynch in November, the percentage of investors who are timid to Japanese stocks was the highest since autumn of 2002.
Trading value for 2009 at the TSE (Tokyo Stock Exchange) is assumed to be at the lowest level in 5 years. Also, it is assumed that trading value of Shanghai Stock Exchange of China will be greater than that of TSE. Number of companies that newly listed this year in Japan is 19, which is the least in 31 years.
One of the few positive atmospherics is the fact that Japanese stocks on hand of investors seems to be less than usual. So when investors change their view and judgment on the administration’s management of the economy and/or exchange rate changes, big investors may increase again their Japanese stocks on hand, which would lead to improvement in Japan stock market.
However, in general, many experts view that for the time being, stock market prices will not improve so much because of the anxiety that the economy will plunge again with deflation.
With deteriorating cash flow of Japanese companies as reported in recent articles by Nikkei, it is natural that Japanese companies would need to raise capital and plunge in stock price would be a big negative factor for them. According to a Nikkei’s article of December 12, debt that Japanese companies have on UAE (general construction, trading etc.) of 66 billion yen (approximately 7.5 billion USD out of 15 billion USD) in total are still uncollected, as of December 11. Also, according to another Nikkei’s article of December 10, there is an anxiety that financial situation (especially consolidated cash flow and interest-bearing debt) of Japanese general construction companies, is deteriorating, attributing to factors such as big burden of reimbursed expenses of big overseas projects of UAE and Algeria.
4. TSE is to revise listing regulation to create an environment in which companies will be able to increase capital flexibly, with minimum negative impact on their shareholders.
According to another today’s article of Nikkei, TSE is to revise listing regulation to create an environment in which companies will be able to increase capital flexibly, with minimum negative impact on their shareholders. The objective of the revision is to enhance flexibility of raising capital and to activate plunging stock market.
Under the current environment, capital increased by public offering leads to drastic decrease in EPS (earnings per share), and current shareholders will gain loss from their stock. TSE will revise listing regulation by the end of the year so that companies can flexibly set capital increase and raise capital by allocating new share subscription right to their shareholders. This kind of method is called Right Issue in overseas stock market, and in Europe, this method is used to raise approximately 60% of total capital raised.
2009年9月22日火曜日
New Budgeting Policy of Japanese Government
Tuesday, September 22, 2009 – Osaka, Japan
Nikkei, Japan’s leading newspaper specialized in economy and politics, reported on September 21 that the new Japanese government established a new budgeting policy of practically implementing multiple-year appropriation from 2010. The framework of the policy will be developed by a committed to be established within the National Strategy Bureau headed by Mr. Kan, and is planned to be submitted in the middle or end of October. There would be no legislative problem in “practical” implementation of the new budgeting system. There are three main budgeting revisions, all of which are designed to improve the effective use of budget.
First revision is practical implementation of multiple-year appropriation. The long custom has been forcing to use up the budget for the fiscal year because of one-fiscal year budget system. This system led to long-year custom of unnecessary road work performed only to use up the fiscal year budget so that the budget can be acquired the following fiscal year. What the government is trying to do is implementing a multiple-year appropriation concept and framework of the U.K., that enables the remaining fiscal budget to be carried over to the following year. In line with this, the government is also planning to establish a foundation and/or revising law(s).
Second revision is abolition of “ceiling” system that started in 1961 as budget request framework. Currently each ministry requests budget by each related expenses such as public work projects and social security according to budgetary request guideline. Instead, the National Strategy Bureau is to prioritize business. The Bureau will compose revenue framework from sources including the government’s economic forecast, and business whose budget exceed this framework could be carried over to the following year.
Third revision is improving budget inspection system. Currently Ministries of Finance and General Affairs and Board of Audit inspect the waste and validity of budget. The inspection will be changed to politics-driven, and achievement progress of the numbers based on the policy set at the beginning of the fiscal year will be monitored. And in the future, the government is to study to implement a system linking this inspection and monitoring with personnel evaluation of government officials. An example is comparing number of prospect users of airport and roads before construction and the actual number of users after the construction, and should a big gap between the two be found, it would be reflected to the personnel evaluation of government officials concerned.
To the author, in short, the three revisions are implementing systems proliferating in many private companies. In many companies, Corporate Planning or Business Plan Analysis department (equivalent to the National Strategy Bureau in the new government) prioritizes business and leads budgeting, although how the top-down and bottom-up are mixed depends on the company.
Mid-term and/or long-term strategy, road map and plan is developed first aligning with the company’s mission and vision, which is then broken down to annual business plan, and quarterly/monthly plan. Performance is monitored regularly and together with the latest forecast, adjustment is made flexibly. And usually MBO (Management by Objectives) is used, linking the goal of company/organization and individual, and reviewing what extent the team and individual target is achieved as well as processes (value & behaviour) of achievement.
The new budgeting system is a solving problem of root cause of such issue as the recent interdiction of additional appropriation for 2009 that do not contribute to business environment improvement. The interdiction has triggered big debate and confusion which is not a surprise and its feasibility is question. With the new revised budgeting system, this kind of issue should not occur.
The long-year systems and customs of public sector are unbelievable for people in the private sector. The new policy and system may have negative impact on some industries and companies such as construction, but in general, it should have positive impact from total optimization perspective. It is highly desired that the new policy is implemented without fail for effective use of budget and higher productivity of the government, meaning growth of the nation and better life of all citizens.
Nikkei, Japan’s leading newspaper specialized in economy and politics, reported on September 21 that the new Japanese government established a new budgeting policy of practically implementing multiple-year appropriation from 2010. The framework of the policy will be developed by a committed to be established within the National Strategy Bureau headed by Mr. Kan, and is planned to be submitted in the middle or end of October. There would be no legislative problem in “practical” implementation of the new budgeting system. There are three main budgeting revisions, all of which are designed to improve the effective use of budget.
First revision is practical implementation of multiple-year appropriation. The long custom has been forcing to use up the budget for the fiscal year because of one-fiscal year budget system. This system led to long-year custom of unnecessary road work performed only to use up the fiscal year budget so that the budget can be acquired the following fiscal year. What the government is trying to do is implementing a multiple-year appropriation concept and framework of the U.K., that enables the remaining fiscal budget to be carried over to the following year. In line with this, the government is also planning to establish a foundation and/or revising law(s).
Second revision is abolition of “ceiling” system that started in 1961 as budget request framework. Currently each ministry requests budget by each related expenses such as public work projects and social security according to budgetary request guideline. Instead, the National Strategy Bureau is to prioritize business. The Bureau will compose revenue framework from sources including the government’s economic forecast, and business whose budget exceed this framework could be carried over to the following year.
Third revision is improving budget inspection system. Currently Ministries of Finance and General Affairs and Board of Audit inspect the waste and validity of budget. The inspection will be changed to politics-driven, and achievement progress of the numbers based on the policy set at the beginning of the fiscal year will be monitored. And in the future, the government is to study to implement a system linking this inspection and monitoring with personnel evaluation of government officials. An example is comparing number of prospect users of airport and roads before construction and the actual number of users after the construction, and should a big gap between the two be found, it would be reflected to the personnel evaluation of government officials concerned.
To the author, in short, the three revisions are implementing systems proliferating in many private companies. In many companies, Corporate Planning or Business Plan Analysis department (equivalent to the National Strategy Bureau in the new government) prioritizes business and leads budgeting, although how the top-down and bottom-up are mixed depends on the company.
Mid-term and/or long-term strategy, road map and plan is developed first aligning with the company’s mission and vision, which is then broken down to annual business plan, and quarterly/monthly plan. Performance is monitored regularly and together with the latest forecast, adjustment is made flexibly. And usually MBO (Management by Objectives) is used, linking the goal of company/organization and individual, and reviewing what extent the team and individual target is achieved as well as processes (value & behaviour) of achievement.
The new budgeting system is a solving problem of root cause of such issue as the recent interdiction of additional appropriation for 2009 that do not contribute to business environment improvement. The interdiction has triggered big debate and confusion which is not a surprise and its feasibility is question. With the new revised budgeting system, this kind of issue should not occur.
The long-year systems and customs of public sector are unbelievable for people in the private sector. The new policy and system may have negative impact on some industries and companies such as construction, but in general, it should have positive impact from total optimization perspective. It is highly desired that the new policy is implemented without fail for effective use of budget and higher productivity of the government, meaning growth of the nation and better life of all citizens.
Japan Postal Administration – Drastic Policy Change from Former Koizumi Administration
Japan Postal Administration Business to be Revised – The Government Expected to Successfully Coordinate with Related Parties and Overcome Challenges
Tuesday, September 22, 2009 – Osaka, Japan
Nikkei, Japan's leading newspaper specialized in economy and politics, reported on September 21 that the new Hatoyama Administration earnestly started to revise Postal Administration Business that former Koizumi Administration had been aggressively initiating, and it is clear that this would give direct and extreme impact on related industries/companies operating in Japan.
Mr. Kamei, the new Minister of Posts and Telecommunications as well as Finance explicitly said his policy that bill of freezing selling stocks of Postal Administration Business will be submitted in the upcoming ad-hoc Diet to be held this autumn. This means that the future direction of the business revision will be composed as “Fundamental Law of Postal Administration Business Reform”, including how divisional companies are to be formed and how the government is to hold stocks.
Postal Administration Business of Japan, consisting of 4 businesses of post offices, postal business, banking/finance, and insurance, had been privatized in October 2008, and the selling of stocks held by the government is to start as soon as the latter half of 2010 and to complete in the end of September 2017 (government to remain holding 1/3 of stocks for post offices and postal business).
This was the biggest topic and initiative under Koizumi Administration. It is because of this timeline that Mr. Kamei is in a hurry to submit the bill. And the reason for freezing the selling of stocks is anxiety of maintaining post office network. Post office management is dependent on banking/finance and insurance business because their revenue is generated from commission fee of contract business from the two businesses. This means that if relationship in capital is abolished, it is possible that business contract is cancelled. The new government is also to review services of postal administration business.
There are many possible options regarding how divisional companies are to be formed and how the government is to hold stocks, which are the discussion points in drafting the bill. It may well take time to come to an optimum option with consensus with all related parties; in fact, it is not clear whether related parties can really discuss in detail to come to concrete action plan in limited time. Having said that, what is quite possible is that the government is to invest 50%+ of stocks in order to maintain control of the management.
With the above, it is quite possible that freedom of Postal Administration management such as business alliance and starting new business shrinks, and it would become more difficult to a develop sustainable business model while successfully coordinating with industries that are to be directly impacted. Such industries/companies are of course banking/finance, insurance, postal and telecommunication industries/companies, the most impacted being banking/finance industry/companies. This is because the banking/finance branch network and business of Postal Administration is as big as the total of all Japanese major financial institutions of private sector, and although at present the limit of saving at Postal Administration banking/finance is 10 million yen (no limit for private sector) to control the power of Postal Administration.
However, government’s control over Postal Administration would imply unbalanced power between public sector of Postal Administration and private sector. For this reason, successful coordination of competition requirements with private institutions would be the key.
To the author, this issue is closely linked with the complicated issue of Mr. Nishikawa, who became the head of the privatized Postal Administration Business in October 2008, and whether he should resign or not had been a big issue, leading to resignation of Mr. Hatoyama, the former Minister of General Affairs (brother of the new Prime Minister), and still is under hot discussion by the new government members. It is quite possible that the new policy intends also to solve this problem.
It is highly desired that the government drafts the policy and action plan that would lead to sustainable growth for all parties thus building Win-Win relationship with all related parties with fair process; i.e. through discussion and coordination with related parties. The bill drafted with such process would surely be successfully passed in the ad-hoc Diet to become an official law, and executed smoothly.
Tuesday, September 22, 2009 – Osaka, Japan
Nikkei, Japan's leading newspaper specialized in economy and politics, reported on September 21 that the new Hatoyama Administration earnestly started to revise Postal Administration Business that former Koizumi Administration had been aggressively initiating, and it is clear that this would give direct and extreme impact on related industries/companies operating in Japan.
Mr. Kamei, the new Minister of Posts and Telecommunications as well as Finance explicitly said his policy that bill of freezing selling stocks of Postal Administration Business will be submitted in the upcoming ad-hoc Diet to be held this autumn. This means that the future direction of the business revision will be composed as “Fundamental Law of Postal Administration Business Reform”, including how divisional companies are to be formed and how the government is to hold stocks.
Postal Administration Business of Japan, consisting of 4 businesses of post offices, postal business, banking/finance, and insurance, had been privatized in October 2008, and the selling of stocks held by the government is to start as soon as the latter half of 2010 and to complete in the end of September 2017 (government to remain holding 1/3 of stocks for post offices and postal business).
This was the biggest topic and initiative under Koizumi Administration. It is because of this timeline that Mr. Kamei is in a hurry to submit the bill. And the reason for freezing the selling of stocks is anxiety of maintaining post office network. Post office management is dependent on banking/finance and insurance business because their revenue is generated from commission fee of contract business from the two businesses. This means that if relationship in capital is abolished, it is possible that business contract is cancelled. The new government is also to review services of postal administration business.
There are many possible options regarding how divisional companies are to be formed and how the government is to hold stocks, which are the discussion points in drafting the bill. It may well take time to come to an optimum option with consensus with all related parties; in fact, it is not clear whether related parties can really discuss in detail to come to concrete action plan in limited time. Having said that, what is quite possible is that the government is to invest 50%+ of stocks in order to maintain control of the management.
With the above, it is quite possible that freedom of Postal Administration management such as business alliance and starting new business shrinks, and it would become more difficult to a develop sustainable business model while successfully coordinating with industries that are to be directly impacted. Such industries/companies are of course banking/finance, insurance, postal and telecommunication industries/companies, the most impacted being banking/finance industry/companies. This is because the banking/finance branch network and business of Postal Administration is as big as the total of all Japanese major financial institutions of private sector, and although at present the limit of saving at Postal Administration banking/finance is 10 million yen (no limit for private sector) to control the power of Postal Administration.
However, government’s control over Postal Administration would imply unbalanced power between public sector of Postal Administration and private sector. For this reason, successful coordination of competition requirements with private institutions would be the key.
To the author, this issue is closely linked with the complicated issue of Mr. Nishikawa, who became the head of the privatized Postal Administration Business in October 2008, and whether he should resign or not had been a big issue, leading to resignation of Mr. Hatoyama, the former Minister of General Affairs (brother of the new Prime Minister), and still is under hot discussion by the new government members. It is quite possible that the new policy intends also to solve this problem.
It is highly desired that the government drafts the policy and action plan that would lead to sustainable growth for all parties thus building Win-Win relationship with all related parties with fair process; i.e. through discussion and coordination with related parties. The bill drafted with such process would surely be successfully passed in the ad-hoc Diet to become an official law, and executed smoothly.
2009年9月21日月曜日
Reality of Aging Society Of Japan
Monday, September 21, 2009 – Osaka, Japan
The third Monday of September is a national holiday of “Respect-for-Senior Citizens Day” in Japan. There have been articles in the newspapers and TV news related to aging society, depicting the reality of the aging society of Japan, whose average age for female is the oldest and is one of the country whose problem of aging society is severe.
Nikkei, Japan's leading newspaper specialized in economy and politics, today reported that according to the survey implemented and analyzed by Ministry of Internal Affairs and Communications (MIC) on estimated population as of September 15, senior citizens above 65 years old increased from 2008 by 800,000 people reaching the highest in the history which is 28.98 million people, even though population of 15-64 years old decreased by 760,000 people from 2008 to 81.56 million people. This is 22.7% of the total population, which is 0.6 point increase from 2008. The female senior citizen over 65 years old is more than 25% of the total population.
Moreover, the household with such senior citizen is 18.21 million, which is increase by 1.8 million from 5 years ago. This includes 4.14 households in which a senior citizen lives on his/her own, meaning higher possibility of solitary death.
TV news this morning reported a few senior citizens full of vitality, both physically and mentally. A 103 year old man looks after himself, leading extremely healthy live including shaving and taking a towel bath of cold water which is known as very good for health. His dining habit is also good; he eats balanced diet cuisines of appropriate quantity, and chews at least 30 times before swallowing. He is fluent in 5 languages and enjoys calligraphy. He says that the secret of being physically and mentally healthy is having something to live for.
A woman of 87 year old is, surprisingly, an active athlete, specialized in 200 metres. She is a record holder of 200 metres for Japanese women over 65 years old of approximately 46 seconds. She started to sprint in earnest when a relay member was desperately needed in a sports day when she was 70 years old and she joined extemporarily. Since then, she has been doing training to sprint everyday and participating in various competitions, giving smashing results. She says that she would like to keep on running as long as she is physically healthy.
The aging society is a big issue in Japan. Because of this issue, the former government established a health care system for the latter-stage elderly in 2008, which had been a topic under hot discussion in the General Election held in August 30. Mr. Nagatsuma, the new Health, Labour and Welfare Minister (nicknamed “Mr. Pension” because he had been asking tough questions on pension before the new government was kicked off), announced recently that this policy will be change/terminated.
The new policy would have direct impact on the senior citizens and on healthcare industry. Of course, the aging society would have impact on overall society, economy, and labour market. Whatever the policy and regulation of the new government may be, it seems that senior citizens cannot simply segmented by their age group and more flexibility is desired.
The third Monday of September is a national holiday of “Respect-for-Senior Citizens Day” in Japan. There have been articles in the newspapers and TV news related to aging society, depicting the reality of the aging society of Japan, whose average age for female is the oldest and is one of the country whose problem of aging society is severe.
Nikkei, Japan's leading newspaper specialized in economy and politics, today reported that according to the survey implemented and analyzed by Ministry of Internal Affairs and Communications (MIC) on estimated population as of September 15, senior citizens above 65 years old increased from 2008 by 800,000 people reaching the highest in the history which is 28.98 million people, even though population of 15-64 years old decreased by 760,000 people from 2008 to 81.56 million people. This is 22.7% of the total population, which is 0.6 point increase from 2008. The female senior citizen over 65 years old is more than 25% of the total population.
Moreover, the household with such senior citizen is 18.21 million, which is increase by 1.8 million from 5 years ago. This includes 4.14 households in which a senior citizen lives on his/her own, meaning higher possibility of solitary death.
TV news this morning reported a few senior citizens full of vitality, both physically and mentally. A 103 year old man looks after himself, leading extremely healthy live including shaving and taking a towel bath of cold water which is known as very good for health. His dining habit is also good; he eats balanced diet cuisines of appropriate quantity, and chews at least 30 times before swallowing. He is fluent in 5 languages and enjoys calligraphy. He says that the secret of being physically and mentally healthy is having something to live for.
A woman of 87 year old is, surprisingly, an active athlete, specialized in 200 metres. She is a record holder of 200 metres for Japanese women over 65 years old of approximately 46 seconds. She started to sprint in earnest when a relay member was desperately needed in a sports day when she was 70 years old and she joined extemporarily. Since then, she has been doing training to sprint everyday and participating in various competitions, giving smashing results. She says that she would like to keep on running as long as she is physically healthy.
The aging society is a big issue in Japan. Because of this issue, the former government established a health care system for the latter-stage elderly in 2008, which had been a topic under hot discussion in the General Election held in August 30. Mr. Nagatsuma, the new Health, Labour and Welfare Minister (nicknamed “Mr. Pension” because he had been asking tough questions on pension before the new government was kicked off), announced recently that this policy will be change/terminated.
The new policy would have direct impact on the senior citizens and on healthcare industry. Of course, the aging society would have impact on overall society, economy, and labour market. Whatever the policy and regulation of the new government may be, it seems that senior citizens cannot simply segmented by their age group and more flexibility is desired.
2009年9月20日日曜日
25% CO2 Reduction, Message to be Delivered in Upcoming Diplomacic Settings by Prime Minister Mr.Hatoyama - What Does This Mean?
Sunday, September 20, 2009 – Osaka, Japan
The Chief Cabinet Secretary of the new Japanese government, Mr. Hirano, announced today which was just broadcasted in the 9 o’clock evening news, that 25% reduction of CO2 emission vs. 1990 is to be fulfilled by 2020. Mr. Hirano also said that this message will be strongly delivered by Mr. Hatoyama, the new prime minister of Japan, in his diplomacy debut, his first visit to the U.S. to meet President Obama, and at the United Nations General Assembly.
This policy was clearly stated in the manifest of the DPJ, the current ruling party, and although it is in line with the global trend of co-existence with the global environment, it is possible that this policy will provoke hot discussions and resistance from the industry world and Japanese citizens.
This policy would mean possible severe regulation and allocation of reduction in CO2 emission to each industry sector and companies operating in Japan (including Japan branch of foreign capital companies). Automobile companies have already taken this trend as a business opportunity and started aggressively to develop and market EV cars. And electronics companies are focusing on environmentally friendly energy and battery business and on developing and marketing eco (environmentally friendly, energy saving and economic) electric appliances. Such automobile and electronic companies had been recently benefiting from the old ruling party’s policy of “Eco Point”, leading to increase in sales. However, in general, severe regulation and allocation of reduction in CO2 emission would be a burden and negatively impact from cost perspective. This negative impact has already been seen reflected in the stock price, as stated in the article posted on September 19.
New Coalition Government Policy, High Yen and Supply & Demand Oppressing Japanese Companies Resulting in Behind Worldwide High Stock Prices Trend
This policy should drive energy saving in all settings (public and private; work place, public places and home settings), and therefore minimum use of electricity including further warm and cool biz is likely to be promoted. This kind of promotion at workplace may well encourage employees to improve productivity and go home as early as possible which also may mean work-life balance and further driving energy saving at public places and home settings. But too much promotion could lead to negative impact, such as debate leading to refraining illumination at amusement and shopping quarters and people would be deprived of entertainment at night and the town would lose “vigour”.
The Japanese new government needs to come into consensus on this policy with the industry world opinion leaders and win the positive public opinion. The government surely would not want to drop its supporting rate with this issue; from Mr. Koizumi’s reform, it is apparent that the “life line” of the Hatoyama government to successfully solve many problems to change Japan. As in the previous article posted on September 6,
The DPJ Expected to Lead Japan to Change Similarly to Turnaround of Ailing Companies but with More Dynamism and Complexity
this policy is not highly evaluated by the governor and citizen so it may well be tough for the new government to convince key members, but this process cannot be ignored, similarly to turnaround and change management of global companies.
The Chief Cabinet Secretary of the new Japanese government, Mr. Hirano, announced today which was just broadcasted in the 9 o’clock evening news, that 25% reduction of CO2 emission vs. 1990 is to be fulfilled by 2020. Mr. Hirano also said that this message will be strongly delivered by Mr. Hatoyama, the new prime minister of Japan, in his diplomacy debut, his first visit to the U.S. to meet President Obama, and at the United Nations General Assembly.
This policy was clearly stated in the manifest of the DPJ, the current ruling party, and although it is in line with the global trend of co-existence with the global environment, it is possible that this policy will provoke hot discussions and resistance from the industry world and Japanese citizens.
This policy would mean possible severe regulation and allocation of reduction in CO2 emission to each industry sector and companies operating in Japan (including Japan branch of foreign capital companies). Automobile companies have already taken this trend as a business opportunity and started aggressively to develop and market EV cars. And electronics companies are focusing on environmentally friendly energy and battery business and on developing and marketing eco (environmentally friendly, energy saving and economic) electric appliances. Such automobile and electronic companies had been recently benefiting from the old ruling party’s policy of “Eco Point”, leading to increase in sales. However, in general, severe regulation and allocation of reduction in CO2 emission would be a burden and negatively impact from cost perspective. This negative impact has already been seen reflected in the stock price, as stated in the article posted on September 19.
New Coalition Government Policy, High Yen and Supply & Demand Oppressing Japanese Companies Resulting in Behind Worldwide High Stock Prices Trend
This policy should drive energy saving in all settings (public and private; work place, public places and home settings), and therefore minimum use of electricity including further warm and cool biz is likely to be promoted. This kind of promotion at workplace may well encourage employees to improve productivity and go home as early as possible which also may mean work-life balance and further driving energy saving at public places and home settings. But too much promotion could lead to negative impact, such as debate leading to refraining illumination at amusement and shopping quarters and people would be deprived of entertainment at night and the town would lose “vigour”.
The Japanese new government needs to come into consensus on this policy with the industry world opinion leaders and win the positive public opinion. The government surely would not want to drop its supporting rate with this issue; from Mr. Koizumi’s reform, it is apparent that the “life line” of the Hatoyama government to successfully solve many problems to change Japan. As in the previous article posted on September 6,
The DPJ Expected to Lead Japan to Change Similarly to Turnaround of Ailing Companies but with More Dynamism and Complexity
this policy is not highly evaluated by the governor and citizen so it may well be tough for the new government to convince key members, but this process cannot be ignored, similarly to turnaround and change management of global companies.
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