Terrie's Take 761 -- What's Wrong with the LDP's New "Japan Revival Vision" Manifesto? Ebiz news from Japan.

[Terrie's Take]

* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.
(http://www.terrielloyd.com)

General Edition Sunday, June 22, 2014, Issue No. 761

+++ INDEX

- What's New -- What's Wrong with the LDP's New "Japan Revival Vision" Manifesto
- News -- More visa loosening
- Web Content/Tech Job Vacancies -- PHP Zend engineer
- Upcoming Events
- Corrections/Feedback
- Travel Picks -- Beniya Ryokan in Fukui, Kobe Mosque
- News Credits

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+++ WHAT'S NEW

We're not economists. We know little of what is going on statistically
in the markets. But being business people, we realize that to stay
competitive we have to be able to read the tea leaves (i.e., the news
and talking to fellow business people) and thus forecast when to
invest and expand and when to batten down the hatches. If you read the
media, you would think that Japan is turning the corner, and now two
months after the consumption tax increase, things are looking
sufficiently good that we can all assume the economy will be back to
normal by October. But when you talk to other business people in the
street about business here and now, the story is not so bright.
Indeed, a recent business confidence survey by the Ministry of Finance
found that the sentiment of corporate leaders fell by its greatest
margin since Q1 2011.

The Abe team is doing a great job of feeding the belief that the
economy is in good hands, by pushing out selective feel-good stats
that the media dutifully repeat, and blue sky visions of the future.
Reading these, you really do get the impression that things might at
last be changing for the better -- and isn't Abe such a great guy for
making that happen? The latest LDP manifesto, the Japan Revival
Vision, which was translated under the direction of one of Abe's
right-hand men, Yasuhisa Shiozaki, and which we heard about from Nick
Benes (someone, btw, who is really in the know), came out last month.
You can find the translation here:

https://www.y-shiozaki.or.jp/pdf/upload/20140620104142_aUVp.pdf

Yes, it's long, and what you will find is that most of the
media-reported headline items are in there: special zones, empowerment
of women, financing support for new entrepreneurs, reduced corporate
taxes, continued pump-priming of the stock market, regional
reinvigoration, and others. It reads pretty well -- almost well enough
to make one hopeful for the future.

But then you put on your critical thinking hat and realize what is not
in the report. For example, there is nothing notable about core reform
of the vested interests that infest  the government and their ability
to suck on public taxes. In particular, there is little mention of
changes in "difficult" sectors such as law, medicine, energy, and
agriculture. At least there was some detail about changing the
academic sector, a previously difficult one. Our guess is that Abe
knows he won't survive politically if he tries to tackle real change
at this stage, and for this reason the report was very short on
specifics.

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[...Article continues]

Unfortunately this means that we as business people have no idea of
knowing just when these initiatives will take place or how well they
will be supported... so it is unlikely to move us (we're including the
hundreds of thousands of other company owners around the country),
into making major new investments or hiring more full-time staff.
Part-timers to cover temporary needs, maybe -- which is why the
unemployment rate is low right now.

With no policy statements to tackle the country's hard-core problems,
we are thus inclined to believe that Abenomics itself is not about
fundamental change. Instead, it's about short-term crisis management
and in reality is a vast scheme to avoid having to change. How else do
you explain transferring government spending to ordinary citizens
through tax redistribution and inflation, rather than cutting wasteful
government spending and self-discipline? Or the consolidation of
national assets under the control of a trusted and compliant group of
chosen winners -- all of whom are Old Boys in one way or another? We
don't see much of substance here to make us think the government
supports a genuinely innovative, vigorous, fair and free, market.

OK, the crowdfunding legislation, if it is allowed, could be good --
so long as the average Mrs Watanabe can be convinced to take a risk
investing in a start-up they never heard of before... (may be a tough
one). Legislation without popular acceptance won't increase the number
of start-ups. Instead, if they added a Japanese twist such as
government yen-for-yen matching, sort of like making the government
the "lead investor", that would increase the credibility of the
funding recipients and might work.

A dimension of Abenomics that hasn't hit the radar yet is that Japan
is not just dealing with a domestic audience. Instead it has to
compete with nearby countries who are willing to fight back, thus
potentially triggering a beggar-thy-neighbor round of devaluations.
Already the South Korean industrial sector is sounding alarm about the
strengthening Won. If Japan is to compete with its neighbors long
term, it is going to have to do a lot more than just polishing up an
old hoe. Rather, it needs to do a deep restructuring that can break it
out of its post-industrial blues and into some strong new lines of
business.

Instead, Japan appears to be trying to stay in the industrialization
club by creating an underclass of even cheaper labor. We can see hints
of what is coming: 5-year "trainee" visas for foreigners, relaxed
hiring/firing rules without any upside for expendable employees, and
the idea that women will now both have to work AND have more kids.
Let's remember that in spite of the so-called labor shortage Japan is
facing, there are still 20m+ (almost 1/3) of workers who can't get
steady jobs. Something doesn't add up here does it?

Abenomics and the stock market bubble currently forming is benefitting
just a small segment of the population, and is creating a wealth
divide that will cause major problems in the future. Instead of the
stock market, we think the PM should be focusing more on the market
segment that actually hires 70% of the nation's workers, SMEs. Abe
needs to tackle through incentives and law the culture of distain and
even outright bullying/abuse that smaller companies suffer at the
hands of the big guys and the bureaucrats. If he can do this, as well
as lift the productivity of those SMEs, then he will be helping the
two thirds of Japanese workers currently missing out on the stock
market boom to become better off. And without that 70% consuming the
nation's output, who else will?

That fact is that Japan's SMEs have been battered by a sea change of
technology and foreign competition and are in a world of hurt. They
need tons of help and a short list of areas that Abe could focus on
include:

1. Helping introduce a level playing field for the little guys. For
example, allowing them to bid for government projects without having
to be forced into profit-robbing sub-contractor relationships with
major firms holding the necessary relationships and vendor accounts.
More specifically, rules like not having enough capital precluding a
company from bidding for government projects need to be abolished.
Better still, be like the USA and have affirmative action rules which
guarantee SMEs and women-owned businesses 25% of government work.

2. Providing subsidized adult education and professional consulting to
help struggling companies re-skill and produce competitive products
and services that can be exported. Right now formal adult education is
virtually unknown in Japan, and we think lack of outside education is
a major reason why the business world is so stuck in its ways.
Attitudes are unlikely to change from the inside.

3. Giving SME companies access to modern tools, particularly IT tools,
to become more efficient and effective. The Japanese employees of SMEs
work hard, so imagine if they could afford to work smart as well?
Currently it is almost impossible for an SME to get a bank loan for a
multi-year R&D loan. How can companies expect to become global
best-of-class competitors if they can't invest in their core
technology?

4. Creating access to quality human resources, and if they can't get
them here, then allowing them (and providing funding and recruiting
support) to recruit from abroad instead.

5. And most of all, SMEs need sufficient capital to make the above
happen. OK, the new manifesto does cover this to some extent, but
given that Japan almost always follows the USA in its legislative
changes, that means that crowdfunding could be several years off yet.
In the meantime we have at least 300,000 zombie companies that either
need killing off or to be forgiven their debts so that they can start
over. That is a decision that is not in the manifesto, but it needs to
be made or these zombie firms will continue to swallow up capital just
to cover old debts, rather than investing for the future. Sure,
US$200m is a lot to forgive, but considering the amounts being spent
by the BoJ to buy essentially worthless government bonds every month,
it seems a small price to pay for the subsequent reinvigoration of the
economy.


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***------------------------****-------------------------***

+++ NEWS

- Farmer protest with live cow in Kasumigaseki
- More visa loosening
- Exports worryingly low
- Wetter summer may hit electricals sales


=> Farmer protest with live cow in Kasumigaseki

The bureaucrats in Kasumigaseki upset enough ordinary citizens every
year that practically every day there is a protest of some type at the
foot of some ministry's tower or other. Last week it was the turn of
the Ministry of Agriculture, when farmers operating an abandoned farm
inside the 20km exclusion zone at Fukushima showed up with one of
their cows. The farmers are trying to get the government to launch a
probe into why the animals have been developing "white dots" on their
skins. The cow being paraded was from Kibo no Bokujo (Farm of Hope),
just 14km from the Fukushima Daiichi power plant, and is from a herd
of 350 animals abandoned there. (Source: TT commentary from
Japantimes.co.jp, Jun 20, 2014)

http://bit.ly/1rj98fq

=> More visa loosening

Encouraged by the success of the visa-free 15-day travel offered to
Thais and Malays last year, the Ministry of Foreign Affairs has posted
a note on its website saying that a Ministerial Council is now
weighing up whether to recommend visa relaxations for travelers from
Indonesia, Vietnam, and the Philippines. Currently Japan receives
about 330,000 travelers from these countries every year, and this is
expected to at least double if the current travel restrictions are
eased -- meaning another 7 million tourists a year, and putting the
government well on its way to hitting 20m tourists by 2020. One of the
concerns has been overstayers from these three countries, but police
statistics show that less than 1,000 people overstay currently. ***Ed:
Our guess is that the visa easing will happen in Q1 of the next
financial year, much the same as the Thai/Malay easing last year.**
(Source: TT commentary from ttrweekly.com, Jun 20, 2014)

http://bit.ly/1poqp5K

=> Exports worryingly low

Due to lower demand in China, elsewhere in Asia, and the USA, Japan's
May exports fell 2.7% over the same month 2013. This is not supposed
to be happening, since the yen's fall in 2012 was supposed to make
exports cheaper and help the country drive an earnings recovery. This
was the first fall in exports in the last 15 months and highlights
again the nation's dependence not just on domestic financial
engineering but also the health of economies elsewhere as well. Most
of the hit consisted of weak imports demand by the USA, and affected
not just Japan, but other exporters in the region as well. (Source: TT
commentary from reuters.com, Jun 18, 2014)

http://reut.rs/1lVLz7c

=> Wetter summer may hit electricals sales

Although most electrical discount store chains are reporting a
surprising bounceback from the hit suffered after the rise of the
consumption tax, they will have another test in the near future, in
the form of an El Nino weather pattern forecast for August. El Nino
will probably bring rain and cooler weather to Japan and thus reduce
the sale of high cost products such as air conditioners and larger
refrigerators. The problem for retail chains is that about 50% of
national sales happen in the June-August period, and thus weather
during early summer can hugely influence their fortunes. (Source: TT
commentary from asia.nikkei.com, Jun 21, 2014)

http://s.nikkei.com/1iiQ4hM


NOTE: Broken links
Some online news sources remove their articles after just a few days
of posting them, thus breaking our links -- we apologize for the
inconvenience.

***------------------------****-------------------------***

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***------------------------****-------------------------***

+++ UPCOMING EVENTS/ANNOUNCEMENTS

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+++ CORRECTIONS/FEEDBACK

=> No corrections or feedback this week.

***------------------------****-------------------------***

+++ TRAVEL DESTINATIONS PICKS

=> Beniya ryokan and onsen in Awara, Fukui
Well-established, authentic hospitality and elegance

Beniya is a long-running ryokan established with the opening of Awara
Onsen (Awara Hot Spring). Its founder, Okumura Togoro, used to run a
wholesale business for small cargo he shipped between the three
countries surrounding the Sea of Japan. The signature product sold
were beniko, or cosmetics. In honor of this source of livelihood, the
ryokan is called Beniya ("ya" meaning shop or house).

With the coming of the Meiji Restoration, Japan underwent rapid
change. Western technology encouraged a focus on land transportation
via rail, and thus the shipping industry began to decline. Togoro
would also have felt the effects of the changing times. He boldly
decided to change his business in 1882. One year later Beniya was
completed with the establishment of the Awara Onsen. In the shadow of
the prosperity of the more profitable red light district, first rate
chefs from the three countries he traded with took a chance and moved
to Japan to start working here.

http://bit.ly/1pTSvtf

=> Kobe Muslim Mosque, Kobe
Miracle or strong construction?

Kobe Muslim mosque is the first mosque built in Japan in 1935. It is
located in Nakayamate Dori in Chuo-ku, a 10-minute walk from Motomachi
station in Kobe.

The mosque's exterior reminds one of old traditional minarets
(minars). The interior is beautiful too, with its white marble walls
and golden paintings. It is a three-storied building constructed in a
very distinctive architectural style, consisting of a base, a shaft
and a gallery. The base is used as a prayer hall for men and occupies
the first floor. The shaft is the second floor, used as prayer hall
for women. The gallery is commonly used to give a call to prayer. The
mosque was built in traditional Turkish style by the Czech architect
Jan Josef Svagr, who is also known for having built several other
religious buildings in Japan.

During the Second World War, at the same time as the atomic bombings,
Kobe was virtually razed to the ground. However, the shocking fact is
that the mosque was still standing erect while virtually every other
building surrounding it was completely demolished. There were only few
cracks on the outer walls of the mosque and the glass windows were
broken. Further, during the Great Hanshin earthquake in 1995, also
known to be one of the worst earthquakes this country has seen, Kobe
was devastated again. While the earthquake caused major damage to the
rest of Kobe, the mosque once again remained standing...

http://bit.ly/1pvCesC

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+++ ABOUT US

STAFF
Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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