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Prime Minister Abe's Remarks at the World Economic Forum

Speaker: Shinzo Abe
Published January 22, 2014

Japanese Prime Minister Shinzo Abe spoke at the World Economic Forum on January 22, 2014. In his speech, "Reshaping of the World: Vision from Japan," he discussed his economic policy, often called "Abenomics," and reform of the monetary and fiscal policies regarding markets and trade agreements.

Thank you, Professor Schwab for your kind introduction. Mr President, it's an honour to speak after you.

Now, I don't know who coined it, but they call my economic policy "Abenomics." Well, I hesitate to go on calling my own name but let me use it anyway.

So, Abenomics has three arrows. The first is a bold monetary policy. The second is about flexible fiscal policy. And the third arrow will continue sparking private investment.

Japan's economy is just about to break free from chronic deflation. This spring, wages will increase. Higher wages, long overdue, will lead to greater consumption.

Our fiscal situation has also made steady improvement. Japan is now getting on track for fiscal consolidation.

Pundits used to say that Japan was at dusk, or the land of the setting sun. They said that for a country as mature as Japan, growth would be impossible. These arguments were made to sound almost legitimate.

You can see what Japan's psyche was like before I took office as Prime Minister.

Hardly can you hear any such voices now. Our growth rate has changed dramatically, from negative growth to positive.

In six years' time, the Olympics and the Paralympics will come to Tokyo. People are now more vibrant and upbeat.

It is not twilight, but a new dawn that is breaking over Japan.


- Such a thing is impossible in Japan? -

May I tell you, ladies and gentlemen, that late last year, we decided to go on major reforms.

I have broken through the notion that certain reforms could never be carried out.

We will completely liberalize Japan's electricity market. By the time the Olympians compete in Tokyo in 2020, Japan's electricity market will also be completely competitive, for both power generation and retail, with power generation split off from power transmission.

In Japan, people have long said that such a thing is just impossible.

We will also foster medical care as an industry. Japan is on the leading edge in regenerative medicine. We will make it possible to generate cells at private-sector factories.

In Japan, people have long said that such a thing is just impossible.

We are also doing away with the "rice production adjustment" system.

This system has been in place for more than 40 years. Private companies will be able to engage in farming without barriers and grow the crops they want, without artificial control over supply and demand.

In Japan, people have long said that such a thing is just impossible.

And yet, last autumn, we actually decided to make all these changes.

In addition, yesterday morning, I gave additional instructions to reform the Japanese system, because we also need large-scale health care companies in the form of holding companies, much like the Mayo Clinic.

I have maintained that I am willing to act like a drill bit; strong enough to break through the solid rock of vested interests.

Soon, our deregulation package will be set in motion. Designated areas, on my own watch, will cut through red tape.

There, over the next two years, no vested interests will remain immune from my drill.

In cities hoping to join the world-class, limits on floor area ratios will become a thing of the past. The sky will be the limit.

We will soon see high-quality housing, or business complexes, and zero-emissions towns appearing, one after another.

The Trans Pacific Partnership, or TPP, will remain a central pillar of my economic policies. We will push ahead the Japan-EU Economic Partnership Agreement.

Those will surely make Japan's economy even more deeply integrated into global flows of knowledge, trade and investment. Companies and people from abroad will find Japan among the most business-friendly places in the world.

Japan's public fund management will also change a great deal. Japan's Government Pension Investment Fund now holds about 1.2 trillion US dollars.

We will press ahead with forward-looking reforms, including a review of that portfolio.

The GPIF will contribute to investments leading to growth.

We must also make the tax system for companies internationally competitive.

We will reduce the corporate tax rate by 2.4% from April this year.

We will also encourage companies to use the cash they have gathered towards capital investment, R&D, and raises in workers' salaries.

To do this, we will put tax incentives into place in a way completely different from before.

This year, we will set about further reform on corporate tax.


- Rebooting the entire country -

We will reform the labour market that ties workers to old industries. New industries require innovative and creative human resources.

We will re-direct our subsidies so that workers without meaningful work in old industries can move to new industries that require good human resources.

Japan is becoming a super-aging society, even as the number of children is falling. You might find yourself asking, "In such a country, where will you find those innovative and creative human resources?"

Ariana Huffington once said that if Lehman Brothers had been "Lehman Brothers and Sisters", the firm would have survived.

Japan's corporate culture, by contrast, is still one of pinstripes and button-downs.

After all the female labour force in Japan is the most under-utilized resource. Japan must become a place where women shine.

By 2020 we will make 30% of leading positions to be occupied by women.

In order to have a large number of women become leading players in the market we will need a diverse working environment.

Support from foreign workers will also be needed for help with the housework, care for the elderly, and the like.

Japan's GDP could grow by 16% more, if women participated in labour as much as men. That is what Hillary Clinton told me. I was greatly encouraged.

Another thing that will be needed is a major impetus for change, aimed at corporate boards.

We will soon put forward changes in the corporate law to the upcoming parliamentary session.

Under these changes, external directors will increase. Next month, we will also draw up a stewardship code. It will make it easier for institutional investors to have a greater role in corporate governance.

All of these combined, I am sure we can double our inward direct investment by 2020.

All this would reboot the entire country. Japan's economic landscape will change dramatically.


- Tsunami, and the survivors' stiff upper lips -

On March 11, 2011, the north-eastern part of Japan was hit by the triple disaster of the earthquake, tsunami and the nuclear power plant failure.

Three years will soon have passed.

The love and compassion we were given from the world touched us deeply.

The recovery is far from over. I am the one most responsible for the future of the survivors.

Yet, it was these very survivors, who helped each other, with stiff upper lips, trying to overcome so many hardships.

Their spirit of perseverance moved people all over the world.


- Proactive contribution to peace -

It is with that same spirit of mutual assistance that Japan is now set to turn into a nation that will contribute even more positively toward world peace.

In Cambodia, the hospital Japan built for mothers and new-born babies helped reduce the country's infant mortality rate.

In the Philippines, after the devastating typhoon, the relief effort by Japan's Self-Defence Forces was movingly welcomed.

Based in Djibouti, our service men and women are still on high alert against piracy, protecting ships from around the world.

In our age, no single nation can preserve peace by itself. None of us alone can solve the challenges the world faces without helping each other.

A new Japan is now waving a banner for proactive contribution to peace. I want you to know you can count on us.


- Securing Asian seas in peace -

Asia has become a growth centre for the world. Japan is surrounded by neighbours with unlimited possibilities, such as China, South Korea, the ASEAN nations, India and Russia, and, across the Pacific, the TPP partner countries.

In this region, which will be the engine driving the world economy forward, I am always contemplating just how we can achieve peace and prosperity, and make them ever-lasting.

The foundation for prosperity comes down to freedom of movement for people and goods. On the sea lanes, in air space, and recently, in outer space and cyber space, freedom of movement must remain secure.

The only way to fully keep these indispensable public goods safe and peaceful is to rigorously maintain the rule of law.

It is for that purpose that fundamental values like freedom, human rights and democracy must be assured.

There is no alternative.

If peace and stability were shaken in Asia, the knock-on effect for the entire world would be enormous.

The dividend of growth in Asia must not be wasted on military expansion.

We must use it to invest in innovation and human capital, which will further boost growth in the region.

Trust, not tension is crucial for peace and prosperity in Asia, and in the rest of the world.

This can only be achieved through dialogue and the rule of law, and not through force or coercion.

Now, in order to turn Asia into a region of trust and order, and not one of force and coercion, I would like, in conclusion, to make an appeal to Asia and the world.

We must, ladies and gentlemen, restrain military expansion in Asia, which could otherwise go unchecked.

Military budgets should be made completely transparent and there should be public disclosure in a form that can be verified.

We should create a mechanism for crisis management as well as a communication channel between our armed forces.

We must lay down rules that promote actions based on the international law of the sea.

Only then, I believe, can we achieve growth and prosperity in Asia, where all of us can realise our great potential.

Japan has sworn an oath never again to wage a war. We have never stopped and will continue to be wishing for the world to be at peace.

It is my fervent hope that, through Abenomics, we can create a vibrant Japan that can bring about peace and prosperity in the region, and in the world.

Thank you very much.

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