Abe keeps his foot to the floor, says Ashburton’s Simon Finch
Measures outlined by Japan’s prime minister suggest further sectors of the economy such as agriculture are set to also feel the effects of ‘Abenomics’.
Last Friday, Japanese prime minister Abe (pictured) announced further stimulus programmes in what is regarded as the third arrow of ‘Abenomics’, in the continued effort to boost Japanese growth and turn around the country’s economy.
The core tenet of the speech was investment. Investment in infrastructure, farming, as well as the export market.
Abe has set a target for annual domestic private sector investment of ¥70tn, which is 10% higher than the current figure, a level last seen prior to the Lehman Shock. He aims to boost infrastructure exports by three times, and has set a target of doubling farm exports by 2020.
Abe is cognisant of the fact that the imminent ascension of Japan into the Trans-Pacific Partnership (TPP) will result in farmer disputes, as they fear the lower trade barriers will result in cheaper agricultural products flooding into Japan. There will also be investment in the supply chain for the agricultural industry, turning that part of the market from ¥1tn to ¥10tn within ten years. In addition, Abe recognises that inefficiencies remain within the agricultural industry which have led to the establishment of a new scheme to sub-lease land from landowners and reallocate it to larger farming units.
There is a keen focus that over the next three years there will be an acceleration of investment into the areas outlined above. In order to encourage investment, Abe noted that the government will seek to alter taxes, as well as push through further deregulation which burdens companies with unnecessary costs and stalls projects and fixed asset investment.
Abe has again put the onus on Japanese innovation and enterprise, saying that the government will foster companies that are operating in renewable resources, and investing in projects such as fuel battery car technology and infrastructure. Included in the announcement was support for venture capital companies and small/medium enterprises to take out loans without guarantees, in the hope that this will encourage innovative products and a return to excellence in technology and R&D.
Finally, Abe realises the need for foreign spending in the country, hence the drive to boost tourist numbers to Japan. If their bid for the 2020 Olympics is successful, it will lead to an increased interest in Tokyo, as well as other hotspots across the country, including Kyoto, Hokkaido and Okinawa.