JAPANESE Prime Minister Shinzo Abe is pursuing an economic policy called the “three arrows” with the aim of boosting the economy and lifting the country out of long-lasting deflation.
The arrows include:
1. Unlimited monetary easing to achieve 2% annual inflation
2. Ramping up public spending
3. Pursing a long-term economic growth strategy
The first arrows helped boost the stock market about 40% as well as devalue the yen 20% against the U.S. dollar. But since Japan’s underlying economy has changed little, stocks and the currency have been fluctuating widely due to the uncertainty of the third arrow, the growth strategy.
Abe’s government unveiled a draft of the growth strategy June 6 with clear targets including:
1. Increase business investment 10% over three years
2. Boost per-capita income by more than 1.5 million yen in 10 years
3. Triple Japan’s infrastructure-related exports to 30 trillion yen
4. Double the scale of the nation’s crop and food exports to 1 trillion yen by 2020.
A lot needs to be done to achieve these targets, and I believe that the growth strategy should focus on three major high growth segments:
1. Green innovation
Renewable energy
Smart cities connected by the a solid infrastructure network
Corporate revitalization
2. Life innovation
Nursing care for elderly people
Integrated health care system
New drug and medical equipment
3. Asia
Transportation, financial and communication infrastructure
Balance of payments
Products and retailing network
The Abe administration should provide strong support to spur private investment and create higher paying jobs that will fill the demand and supply gap in Japan.The government’s policies and spending budget should be laid out and these three areas should be the enablers to boost the economy:
1. Provide tax incentives in strategic growth segments and lower the corporate tax by 10 to 15%
2. Deregulate to foster new businesses and increase competition
3. Develop global business leaders. tj
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