Miyazawa hints at steps to spur corp restructuring<\/p>\n
MANILA (Dow Jones): Japan gave fresh indications over the
\nweekend that it's serious about ridding its economy of excess
\ncapacity, but dashed hopes once again of new fiscal spending to
\nboost growth.<\/p>\n
At the 32nd annual meeting of the Asian Development Bank,
\nwhich ended Sunday, Japanese Finance Minister Kiichi Miyazawa
\nemphasized the need for Japan to address massive excess capacity
\nweighing on the economy by spurring the process of corporate
\nrestructuring.<\/p>\n
"There are issues that have to be tackled from now, and
\ncorporate restructuring is something we have to see," Miyazawa
\ntold a news conference Saturday.<\/p>\n
Cleansing the economy of excess capacity is a must before
\nJapan can get back on a steady growth path, analysts say. But
\nwaiting for Japan to trim the excess fat -- and many observers
\nestimate it will take at least five years -- is cold comfort to
\nthe region's embattled economies, looking to Japan to take
\nswifter recovery measures.<\/p>\n
Recognizing the need to speed up the process, Miyazawa said
\nthat policy steps, which could include tax incentives to
\nencourage companies to shed redundant facilities and measures to
\nease the pain of adjustment, "may be necessary."<\/p>\n
He made clear, however, this wouldn't put additional pressure
\non the country's deteriorating fiscal condition, saying it would
\nonly become a "small fiscal burden ... not a so-called big fiscal
\nburden."<\/p>\n
These remarks came just days ahead of a meeting scheduled
\nMonday between Japanese Prime Minister Keizo Obuchi and U.S.
\nPresident Bill Clinton and could be a precursor to an
\nannouncement of a package of measures to breath life into the
\neconomy, albeit ones lacking fiscal punch.<\/p>\n
While such steps would be welcome, they would fall short of
\nthe expectations of Japan's neighbors and its counterparts in the
\nGroup of Seven industrialized countries.<\/p>\n
The G7 last week called on Japan to use "all available tools"
\nto support strong domestic-demand led growth, and said its
\neconomy's "short-term prospects remain uncertain."
\nSays Govt Isn't Planning Additional Spending<\/p>\n
But Miyazawa stuck to his guns at the ADB meeting, reiterating
\nthat the government is gauging the impact of current measures and
\nisn't planning further spending.<\/p>\n
"It's necessary to see the effects (of the steps already
\ntaken). I don't think there will be (additional) spending right
\naway," Miyazawa said.<\/p>\n
To be sure, Japan has taken substantial measures to jumpstart
\nits economy, including a massive bailout of its banking system,
\nmonetary easing that has pushed short-term interest rates to near
\nzero, as well as record amounts of government spending.<\/p>\n
The Japanese government insists those steps will be enough to
\neke out growth of 0.5 percent in gross domestic product in the
\ncurrent fiscal year ending March 31, 2000.<\/p>\n
But most analysts say that target is hugely optimistic and
\nwarn that, by frontloading some 80 percent of public works
\nspending to the first half of the fiscal year, the government has
\nset the economy up for a sharp slowdown in the second half.<\/p>\n
Consequently, there have been growing calls for a fresh fiscal
\npackage to fill the gap after the government spends 15 trillion
\nyen on public works in the first six months - out of a total 19
\ntrillion yen budgeted for the full year.<\/p>\n
But Miyazawa reiterated to a gathering of finance ministers
\nfrom the Association of Southeast Asian Nations at the ADB
\nmeeting that he isn't considering a supplementary budget,
\naccording to a Finance Ministry official who was at the talks.<\/p>",
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