On target? Selected objectives of Abenomics’ ‘third arrow’
Labour and demographics
● Goal: Make Japan’s labour market more flexible; diversify and expand the labour force by increasing opportunities for women and bringing in more foreign workers
● What has been done? Day care-related spending increased by a third to about Y700bn ($6.8bn) this fiscal year; visa periods for “technical trainees” in the construction sector extended temporarily (ends 2020)
● But . . . More aggressive rollback of job protections for full-time workers shelved; proposal to open door to 200,000 immigrants a year shot down
● Goal: Make Japan’s labour market more flexible; diversify and expand the labour force by increasing opportunities for women and bringing in more foreign workers
● What has been done? Day care-related spending increased by a third to about Y700bn ($6.8bn) this fiscal year; visa periods for “technical trainees” in the construction sector extended temporarily (ends 2020)
● But . . . More aggressive rollback of job protections for full-time workers shelved; proposal to open door to 200,000 immigrants a year shot down
Corporate tax
● Goal: Lower Japan’s corporate income tax rate from roughly 38 per cent to something closer to the OECD average of 25 per cent
● What has been done? 2.4 per cent surcharge to fund tsunami reconstruction lifted in April, one year early
● But . . . Mr Abe has won backing to cut the base rate starting next fiscal year but the policy update may not contain a detailed timetable or an ultimate target level
● Goal: Lower Japan’s corporate income tax rate from roughly 38 per cent to something closer to the OECD average of 25 per cent
● What has been done? 2.4 per cent surcharge to fund tsunami reconstruction lifted in April, one year early
● But . . . Mr Abe has won backing to cut the base rate starting next fiscal year but the policy update may not contain a detailed timetable or an ultimate target level
Trade
● Goal: Increase ratio of Japan’s international trade that falls under free-trade deals from 20 per cent to 70 per cent
● What has been done? Japan-Australia bilateral trade deal signed in April, including limited reduction of Japanese tariffs on Australian beef and other agricultural products
● But . . . Bilateral Japan-US trade talks remain deadlocked, stalling broader negotiations over the proposed 12-nation Trans-Pacific Partnership; Japan-EU trade deal also in limbo
● Goal: Increase ratio of Japan’s international trade that falls under free-trade deals from 20 per cent to 70 per cent
● What has been done? Japan-Australia bilateral trade deal signed in April, including limited reduction of Japanese tariffs on Australian beef and other agricultural products
● But . . . Bilateral Japan-US trade talks remain deadlocked, stalling broader negotiations over the proposed 12-nation Trans-Pacific Partnership; Japan-EU trade deal also in limbo
Medical care
● Goal: Turn Japan’s pharmaceutical and healthcare sectors into engines of economic growth
● What has been done? Pharmaceutical law amended to allow online sales of non-prescription medicines (with some exceptions); restrictions on testing of regenerative therapies such as stem-cell treatments loosened; approvals process for advanced drugs changed to allow for faster approval
● But . . . Doctor-supported rule that prevents patients from collecting insurance payouts if they try experimental therapies is seen as a big obstacle. The policy update may contain a goal of relaxing this rule, but how aggressively?
● Goal: Turn Japan’s pharmaceutical and healthcare sectors into engines of economic growth
● What has been done? Pharmaceutical law amended to allow online sales of non-prescription medicines (with some exceptions); restrictions on testing of regenerative therapies such as stem-cell treatments loosened; approvals process for advanced drugs changed to allow for faster approval
● But . . . Doctor-supported rule that prevents patients from collecting insurance payouts if they try experimental therapies is seen as a big obstacle. The policy update may contain a goal of relaxing this rule, but how aggressively?
Special economic zones
● Goal: allow specified cities and regions to carve out exemptions from national regulations
● What has been done? Law allowing creation of “national strategic economic zones” passed; six zones named in March: Tokyo (promotion of foreign investment); Osaka-Kyoto-Kobe (medical research); Fukuoka (employment); Okinawa (tourism); two cities in Niigata and Fukui (agriculture)
● But . . . Zones are more policy tool than policy, and no specific deregulation plans have been drawn up yet
● Goal: allow specified cities and regions to carve out exemptions from national regulations
● What has been done? Law allowing creation of “national strategic economic zones” passed; six zones named in March: Tokyo (promotion of foreign investment); Osaka-Kyoto-Kobe (medical research); Fukuoka (employment); Okinawa (tourism); two cities in Niigata and Fukui (agriculture)
● But . . . Zones are more policy tool than policy, and no specific deregulation plans have been drawn up yet
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