You worked with Mr. Suga’s team when he was Chief Cabinet Secretary. What insights do you have into what sort of prime minister he will be?
Mr. Suga has been a very important key player in the cabinet as a very close partner for Prime Minister Abe, especially around coordinating with key ministries. When the government planned reforms or new initiatives, they needed strong support from key ministries such as taxation or education or labor reform or anything.
Mr. Suga has been vocal in promoting the key initiatives that push the national economy, including relaxing visas for visitors and restrictions on professional workers. Suga also strongly supported an initiative in taxation, what we call Furusato Nozei, a policy aiming to revitalize regional economies by allowing tax-deductible donations to municipalities. He comes from a rural background as well, so decentralization and revitalizing regions in Japan is an important theme for him.
Suga really understands the importance of leveraging the global economy for Japan’s benefit. He was a strong supporter for promoting and exporting Japanese agriculture products to other parts of the world, a key mindset change, as traditionally Japanese agriculture has not been export-orientated. One common theme that runs through all of this is, he has been very focused on revitalizing the Japanese regional economy through attracting foreign investment and people.
He has already publicly expressed that he wants to have a strong reform-oriented minister for each position, which shows his strong commitment to continue Mr. Abe’s economic policies, especially around structural reform. And he wants to further push regulatory reform as a key driver for the national economy.
Consistency is key. Some analysts are already saying that “Suganomics” will take over Abenomics. In terms of monetary policy, Bank of Japan Governor Kuroda is highly appreciated by Mr. Suga, who has already said that he supports further fiscal stimulus. The national economy or economic growth is a key theme for Suga, although he understands that the top priority is addressing the coronavirus situation.
In terms of geopolitics, I think the main thing on the minds of many is the US-China relationship. How do you see that affecting Japanese businesses abroad and as non-Japanese businesses interested in Japan?
Yes, the general geopolitical tension affects Japanese politics as well as the Japanese economy and business environment. Aligned with the security measures or political measures taken by the US or other countries, the Japanese government has implemented restrictions or new rules around trade with foreign countries.
Japanese corporations have been affected by a decrease in trade volume with China, while seeking more partners in South East Asian countries. However, Japanese corporates really understand the importance of keeping business ties with China, and hence the key going forward will be whether some perceived security concerns can be addressed and whether trust in China and Chinese companies can be improved.
In terms of regional or international security, Mr. Suga will likely take over the course charted by Mr Abe and emphasize the US-Japan alliance and partnership with India, Australia, as well as important relationships with China and other Asian countries in order to secure this region.
Prime Minister Abe formed some significant trade deals. How do you think Mr. Suga will handle foreign trade?
It’s very important for us, not only Japan but also for countries in Asia, to have transparent rules for trade and any other business rules. The Trans-Pacific Partnership, Japan-EU Economic Partnership Agreement, the Regional Comprehensive Economic Partnership and other trading trade negotiations and agreements that Mr. Abe formed will remain key for Japan. We cannot separate ourselves from other countries. We cannot survive. Those open trading policies would be key for us to continue our economic growth and prosperity.
What are the opportunities for businesses looking to invest in Japan?
Japan’s business environment, especially in terms of political stability, make it one of the best places to be for predictability—I think that’s important for any corporates planning to invest for the long term. It is inevitable that Japan becomes a more friendly place to do business for domestic and foreign companies alike. An aging society means Japan will be looking to open the country to more companies and people from the rest of the world.
Your mention of the aging society reminds me of an interview in the Brunswick Review we had a few years ago with Hiroshi Komiyama, Chairman of the Mitsubishi Research Institute and former President of the University of Tokyo, one of the most respected academics in Japan. His point was that the aging society, often seen as one of the huge challenges that Japan faces, is also an opportunity, as whatever innovations Japan can develop to address the aging society—be it technology, services, policy mechanisms, etc.—will be applicable in other markets who will eventually face similar demographics. His point was that an aging workforce can be a catalyst for an economic evolutionary leap to what he calls a “Platinum Society.” This is one of various ways in which the Japanese market is still likely to continue to provide opportunities for businesses under the Suga administration and further on.
I fully agree. We can provide a kind of sandbox for other countries, trying out many things. That’s what we should do, because we’ve enjoyed a very matured economy over the last century—we have a responsibility to show some willingness to help other countries by demonstrating approaches to an aging society.
Daisuke Tsuchiya is a Partner based in London. He advises both Japanese clients on international communications and non-Japanese clients on communication needs in Japan. He has worked on various issues, including crisis, mergers and acquisitions (M&A), and corporate reputation building, utilizing his extensive contacts in media, government, and corporate sectors in Japan and internationally.
Photographs courtesy of Yoichiro Sato and Daisuke Tsuchiya.