Strong reasons for optimism remain

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Strong reasons for optimism remain

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• Publié par: uhezyxuk
• Nombre de lectures: 73
• Langue: English
• Poids de l'ouvrage: 9 Mo

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Video Investing in minister for An interview with Masayuki Naoshima, economy, trade and industry FI J NANCIA A L TIMES P SPECIA A L REPORT N | Monday February 8 2010 dioeapvnaj f t.com/ ft.com/invest-japan-2010 | twitter.com/ftreports Strong reasons for optimism remain There have been early jitters for the government but the country remains a powerhouse of technology and craftsmanship, writesMure Dickie h e nJ a p a n ’ si m p e r i a l court finally succeeded in e la r t e e dt 1 h W csvonoidseosonlb edanyface-lahcretaergneve se7,orni86 toppling the long-ruling Tokugawa shogunate in - lenge: deciding what to do next. A first policy gathering of key courtiers “failed to reach a decision”, according to historian Donald Keene. “Proponents of rule by the emperor had not given adequate consideration to the problems they were likely to encounter when they assumed respon- sibility for government,” Prof Keene wrote in his history of the era. That inauspicious start to what is now known as the Meiji Restoration – a political turning point that cata- pulted Japan into modernity – should be a source of comfort for interested observers of the nation’s most recent revolution. For while Japan’s new Democratic Party has undoubtedly made history by ending the long conservative domi- nance of post-war politics, the partyTrials of leadership: prime minister, Yukio Hatoyama, and his Democratic party of Japan have sometimes seemed unready for the realities of power AFP and its scholarly prime minister Yukio Hatoyama have since oftenconvinced by the much-heralded blue-allowed at least some novice DPJ min-ficult economic situation”, but insistsmedium-sized companies still lead inmay require greater leadership than appeared unready for the realities ofprint for a new growth paradigm pub-isters to hit the ground running. Athat the foundations are being laid forglobal niche markets, from printerMr Hatoyama has shown so far, how- power. lishedin December. “The DPJ’s just-DPJ revamp of government proce-a true revival.parts to nuclear reactor components,ever. Opinion polls suggest many vot- Torn between the conflicting needreleased 10-year ‘growth strategy’ doc-dures has already gone some way to“The Japanese people have a highfor example.ers are losing faith in the wealthy to shore up a fragile economic recov-ument offers neither growth nor strat-meeting its pledge to curb the powerlevel of ability and great potential forAlso more stodgy sectors, such asformer engineering professor, scion of ery and repair the state’s batteredegy,” sniffed the Oriental Economistof the country’s elite bureaucracy –the future. As we steadily implementservices and agriculture, can be seena celebrated political dynasty, whose finances and deeply divided on how tonewsletter. an ds ofa rw ith o u tc a u s in ga n ythe new strategy, I believe the econ-more as a national opportunity than acollegiate style is seen by critics as handle a high-profile dispute with theStill, by Meiji standards, the currentadministrative crises.omy will return to growth and youproblem, given that any success inmere inability to make tough deci- US about a military base, the DPJpolitical transformation – dubbed byNor can the DPJ be blamed for eco-will be able to invest in this countryraising productivity levels wouldsions or impose discipline on an often govern m en th asseen its ratings MrHatoyama a “bloodless Heisei Res-nomic problems that developed underwith confidence,” Mr Naoshima says.t r a n s l a t ed i r e c t l yi n t oe c o n o m i cfractious cabinet. slump and faced a barrage of criticismtoration” after the reign-name of thethe half century of dominance by theThere are indeed some good reasonsgrowth. And DPJ promises to build aMr Hatoyama’s vacillation over a from the media.current emperor – is actually a modelLiberal Democratic party it ousted sofor such faith. While the depth of lastbetter social safety-net and ease thecontroversial US marine base reloca- Perceptions of uncertain govern-of orderly progress.emphatically last year.year’s recession was a reminder of thefinancial burden on parents should got i o no nt h es o u t h e r ni s l a n do f ment have also fuelled a few ripples ofMeiji reformers only started makingMasayuki Naoshima, a senior DPJdangers of over-reliance on externalat least some way to supportingOkinawa has been widely blamed for concern among international inves-a policy impact after months of politi-member and now minister of econ-demand, Japan remains a powerhousedomestic demand and boosting theallowing the issue to become a focus tors about the sustainability of debtcal vacuum and civil war. The currentomy, trade and industry, accepts thatof technology and craftsmanship.low national birth-rate. levels. Nor are many analysts entirelymore tranquil transfer of power hasthe nation is facing an “extremely dif-Innumerable little-known small andFollowing through on such pledges Continued on Page 2

Inside this issue EconomyThe government is hoping a spending spree will stimulate recovery, writesMure DickiePage 2 Government bondsLindsay Whippsays banks’ excess funds continue to underpin demandPage 3 Case study: Krispy KremeJonathan Sobleconsiders an unlikely success story in snack food (right)Page 4 DesignLeaders in innovation are feeling the pressure, writes Robin HardingPage 6 WinemakingVineyards have many

obstacles to overcome.Michiyo Nakamoto reportsPage 6 Video on FT.com Mure Dickiereports from Tokyo on the state of the Japanese economy. Plus interviews with Atsushi Saito, Tokyo Stock Exchange chief executive, Peter Tasker of Arcus Research and Masamichi Yoshizawa, partner at Longreach Group ft.com/japanvideo Twitter Follow FT Special Reports at twitter.com/ftreports

Ruling party loses momentum in wake of funding scandals

Politics The DPJ’s approval rating is falling, writesMure Dickie

W h e nY u k i oH a t o y a m a , J a p a n ’ sp r i m em i n i s t e r , cited Mahatm aG andhi’s Seven Social Sins in a high- minded speech opening the Diet’s 2010 session, mem- bers of the opposition Lib- eral Democratic party scented an opportunity. After all, the late Indian independence leader’s injunctions against “politics w i t h o u tp r i n c i p l e s ”a n d “ w e a l t hw i t h o u tw o r k ” c o u l db ec o n d e m n e da s hypocrisy, coming from the leader of a ruling Demo- cratic Party of Japan badly battered by fund-raising scandals involving its two most important leaders. Ichiro Ozawa, the DPJ secretary-general, spent the f i r s tw e e k so ft h ey e a r under siege from a prosecu- torial investigation into a 2004 property purchase by his fund-raising group. Mr Hatoyama himself was in December forced to pay gift tax on more than Y1bn (US 111m) in funds given to him by his fabulously w e a l t h yh e i r e s sm o t h e r between 2002 and 2008, lar- gesse of which the prime minister says he was entirely unaware. S oL D PD ietm em bers no doubt felt they were scoring an easy political point by responding to Mr Hatoyama’s condemnation of the unprincipled politi- cians and the indolent rich with raucous calls of “That’s you!”

Nor was Mr Hatoyama’s Gandhi quote the only polit- ical weakness exposed in the 51-minute speech. Though packed with lofty goals hard to disagree with (the prime minister set the tone with the bold declara- tion that he wanted to “pro- tect people’s lives”), its lack of detail offered fresh ammunition to opponents, who paint him as an inef- f e c t u a ll e a d e rp r e s i d i n g over a divided cabinet. Such criticism matters. Despite its historic land- slide election over the long- ruling LDP last August, the cen tre-leftD P Jh a slo st much of its political m o m e n tu msin c eta k in g power in September. Recent opinion polls put cabinet approval ratings at well under 50 per cent, com- pared with more than 70 per cent in the govern- ment’s first weeks. And fading voter enthusi- asm will mak eit mu ch harder for the DPJ to win a majority in a Diet upper house election expected in July. For the moment, the pub- lic appears convinced that the influential but unpopu- lar Mr Ozawa is calling the DPJ’s political shots, while confidence in Mr Hatoyama has been further under- mined by wavering on high- profile issues such as the planned relocation of a U Sm a r in eb a s eo n Okinawa. Even many supporters of the DPJ and its desire to transform Japanese politics and government feel disap- pointed. “I cannot help but wonder whether a leader who appears so uninterested in

the details of his policies and so unwilling to fight for them can be successful in power,” wrote Tobias Har- ris, a political analyst sym- pathetic to the DPJ, in his Observing Japan blog. Still, it is much too early to write off Japan’s political revolution as a failure. A handful of high-profile pol- icy stumbles aside, the tran- sition to a new administra- tion staffed almost entirely by ministers with no prior experience of administra- tion has been impressively smooth. And the Diet has a cohort of new members from a broad range of backgrounds

Ichiro Ozawa, DPJ secretary-general, spent the first weeks of the year under siege from an investigation into a property purchase

who can gain experience of government. W h i l eM rH a t o y a m a ’ s speech was easy to mock, it also demonstrated the pos- sibilities created by the end of the LDP’s half-century ascendancy. Where past prime minis- ters’ addresses were dry policy summaries largely w r i t t e nb yb u r e a u c r a t i c committee, Mr Hatoyama’s very personal statement embodied the DPJ’s deter- mination to ensure that pol- iticians, not unelected offi- cials, set Japan’s course. And if the DPJ has yet to transform itself into a fully

convincing ruling party, the L D Pi sh a v i n ga mu c h harder time adapting to the realities of life in opposi- tion. The party is floundering to decide what it stands for. Prosecutors’ investigations into the financial affairs of Mr Hatoyama and Mr Ozawa have helped the LDP seize the political initiative, but voters will not forget the long string of much larger graft scandals that marred its own decades in office. Kaoru Yosano, a former finance minister and party heavyweight, says the LDP needs to do much more than merely exploit DPJ failings. “First we have to clean up our own party’s dirty imageÉ We have to estab- lish that the party has a sense of responsibility, that it has a conscientious future outlook,” he says. “We need a new paradigm that is persuasive and in line with a modern society.” Finding a new paradigm will not be easy, however, and the DPJ’s hefty lower house majority means it need not fear a few blows from LDP hecklers. Some analysts say that even scandals and missteps should not prevent a DPJ v i c t o r yi nJ u l y ’ su p p e r house poll. Still, the ruling party has no room for complacency. A once-supine electorate dem- onstrated last year that it is now ready to turf out an inadequate government. By t h et im et h en e x ts u c h opportunity comes round in four years, the DPJ must have more to show than lofty rhetoric.