Magazine article Business Asia

Rapid Change Vital to Cure Japan's Woes

Magazine article Business Asia

Rapid Change Vital to Cure Japan's Woes

Article excerpt

Forget the impact of the Asia crisis: lack of reforms in Japan mean the superpower has been its own worst enemy.

Chronic infrastructure problems are weighing down Japan's economy and must be addressed if the superpower of Asia is to lead the region out of its economic crisis, according to a renowned Asia commentator.

Professor Peter Drysdale, director of the Asia Pacific Economics Group, said Japan's woes were deep-rooted.

"Japan's problems are much more strongly located in the deep infrastructural problems of the Japanese economy. Those problems have to do fundamentally with the delivery of the so-called Big Bang financial reform ... It's not just a financial reform (that is needed) but deep institutional change," Professor Drysdale said at a recent Business Asia lecture.

He said Tokyo's financial system needed to move away from "non arms-length transactions" between the financial sector and the non-financial corporates.

"Reforms will deliver new technology and efficiency to the financial sector, but it will do much more than that ... It will strengthen the effectiveness of the non-financial corporate sector in a fundamental way because it will break down these non arms-length transactions between the banking sector and the nonfinancial corporates."

Compounding the nation's crisis was Japan's life employment system, which had "reached its use-by date", according to Professor Drysdale.

He said reforms of the employment market should include better use of women. …

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