Week of March 21, 2016
- In July Japan will see election for the House of Councillors (the upper house), perhaps combined with election for the diet (lower house). The Japanese agriculture sector is no fan of PM Shinzo Abe. Main objections: the Trans Pacific Partnership (TPP), a free trade zone between the countries bordering the Pacific. Moreover, Mr. Abe is trying to reform the very inefficient agricultural sector. The government estimates that the value of agricultural, forestry and fisheries production will fall by between 130 billion and 210 billion yen (EUR 1 billion to EUR 1.6 billion) as a result of the TPP. Many in the agricultural industry are saying that these figures in fact underestimate the impact of the TPP on Japanese agriculture (The Diplomat).
- But with Donald Trump in the White House, the TPP may die before it has become reality. The Trump candidacy continues to stir angst in Japan, writes Japan Today. Not only does The Donald think that Japan should take care of its own defense, he also claims that Japan has been stealing jobs. For PM Abe it may be good news however, as it could simplify his attempts to change Japan’s constitution, notably Article 9 on defense (Japan Today). Trump told the New York Times this weekend that he is open to the idea of both Japan and South Korea developing their own nuclear weapons and he would be willing to withdraw U.S. troops from their soil.
- Meanwhile Japanese journalists are accusing the government of putting pressure on the media. Three news anchors have stepped down after strong comments on their reporting by representatives of the Japanese government. More than before with Liberal Democratic Party governments, "the Abe administration is most nervously checking what the media say, because what’s said on television affects his support ratings,” said Shuntaro Torigoe, a former Mainichi newspaper journalist and news anchor on TV Asahi. “In Japan today, rather than the media watching the authorities, the government watches the media,” writes Japan Today.
- When you’re not sure if a planned VAT increase will be a right choice, what do you do? Premier Abe invited two American Nobel Prize winners for advise. With a staggering public deficit the Japanese government is looking to increase its tax-income and a VAT increase from 8% > 10% seemed a logical step. That is not gonna happen. Paul Krugman and Joseph Stiglitz both advised (as far as we can see) to delay this tax hike (Financial Times).
- Meanwhile the Financial Times, usually critical to Mr. Abe’s policy, has a compliment: postponing the VAT hike planned for April 2017 is a modest but sensible step. The previous VAT increase from 3% > 5% (1997) and from 5% > 8% (2014) were quickly followed by a recession.
- Mitsubishi Corp., like other Japanese trading houses (Mitsui, Marubeni), announced large write-offs of its investments in commodities. As a result Mitsubishi Corp. will suffer a first time ever net loss in the year ending on March 31, 2016, of apr. EUR 1.2 bln (Financial Times).
- But no pity with big Japanese corporations: corporate assets in cash and deposits reached a record high of JPY 246 trillion (EUR 2 trillion), rising for the 29th consecutive quarter, according to Flow of Funds data released by the Bank of Japan on Friday. Also household’s assets rose: to no less than 902 trillion yen (EUR 7 trillion), the highest level on record, marking nine straight years of growth. That looks like good news, but at the same time households are tightening their purse strings as wages are stagnant while companies are hesitant to invest at home amid global economic uncertainty (Bloomberg).
- A Reuters poll showed that some Japanese companies are ready to store their cash in a safe if bank interest rates go negative. Sales of safes are now running some 40 to 50% above this time last year. (Japan Today).
- But it’s not all stand-still. This week Yokohama Rubber announced to buy Dutch based (but manufacturing in Israel and India) company Alliance Tire Group; heavy duty tires, so not for your car (Nikkei).
- Japan and robots: that is a strong combi as we have seen in DUJAT’s 2014 Update symposium “Made in Japan, Made in Holland”. One of our keynote speakers was Prof. Toshio Fukuda, who is a world famous developer of robot-systems.However, as robots start to interact ever more closely with us, a number of new ethical questions are emerging, related to a variety of issues, from violence to sex to privacy. The Nikkei raised a number of questions including: is it right to abuse, trust or make love to a robot? The question is perhaps even more relevant in Japan, as its main religion, Shinto, believes that every object has a spirit inside. So why not robots? Wouldn’t it be appropriate to think about the ethics in behaviour between humans and robots? I think it would be a very interesting subject for a DUJAT symposium.
- Somehow related: this week it became known that a novel written by a robot (or: an Artificial Intelligence program, together with a human writer) made it into the second round of the prestigious Nikkei Hoshi Shinichi Literary Award. Sure, it is only the beginning, but even novelists may become obsolete (Los Angeles Times).
- Alas, we also could read last week in The Guardian that no less than 333 whales were killed in a Japanese whaling expedition, just "for scientific purpose”. There is little appetite in whale meat in Japan and there are reports that there are thousands of tons of excess whale meat stored in port freezers. That is another debate on ethics …