Reforms, cornerstone for Japan's economic recovery

16 Jun '06

4 min read

World Economic Forum (WEF) announces Japan's recovery from its "lost decade" of economic growth has come thanks to impressive and painful but regrettably incomplete reforms, senior government and business leaders told participants at the World Economic Forum on East Asia.

Addressing the challenges posed by the rapid rise of China and India in the global economy will require that Japan's next government seize the opportunity to increase the pace with which they internationalize Japan, its industries and workforce.

"Japan has changed enormously in the last five years, but did we change sufficiently? The answer is no," said Heizo Takenaka, Minister for Internal Affairs and Communications and for the Privatization of the Postal Services of Japan. "The world is changing very fast and proactive reform is in order. We have only begun."

Japan is at a crossroads. After leading the struggle to transform his party, the Liberal Democratic Party (LDP), and the nation's economy, Prime Minister Junichiro Koizumi is due to retire in September. The party has yet to name a successor. So while Japan is reaping the benefits of the latest series of reforms in the form of a sustained economic recovery, the danger, panellists said, is that the next government allows the pace of reform to slacken.

The session heard that Japan was in a much stronger condition to compete than it was 15 years ago. Japan's financial sector, for example, has been significantly overhauled. Non-performing loans have been drastically cut.

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