Under the leadership of Prime Minister Fumio Kishida, Japan is implementing various policies aimed not only at overcoming the difficult circumstances arising from global challenges in the short term, but also to strengthen efforts related to its national growth strategy known as “New Capitalism”
The foundation of the “New Capitalism” promoted by Japan is a diverse society in which everyone can feel a sense of fulfilment in life. We spoke with Tatsuro Masuda, First Secretary of the Embassy of Japan, about the specific characteristics of this initiative and the challenges currently confronting the Japanese economy.
How well has Japan’s economy been responding to global threats since the outbreak of the COVID-19 pandemic?
We are living in difficult times. In addition to international challenges like the pandemic, Russia’s aggression against Ukraine and climate change, Japan is simultaneously facing difficult social challenges at home, such as soaring import resource prices in the midst of a still fragile recovery, declining and ageing populations, as well as potential growth stagnation.
Japan has been proceeding with various policies under PM Kishida, not in order to simply overcome these difficult circumstances from a short-term perspective, but also to position efforts to solve these social issues within our growth strategy over the medium and long term. Specifically, Japan is promoting initiatives to activate the “New Form of Capitalism” in order to make economic and social structures more resilient and sustainable, by implementing prioritised investments through public-private collaboration and regulatory and institutional reforms in a systematic manner.
What does the near future hold in terms of economic growth and job creation?
The “New Form of Capitalism” announced by PM Kishida is an initiative to realise a ‘virtuous cycle of growth and distribution’, whereby the public and private sectors work together to achieve economic growth and distribute the fruits of that growth appropriately, and lead to the next stage of economic growth. The core investment areas of this initiative are science and technology/ innovation, start-ups, green transformation (GX) and digital transformation (DX), with the aim of expanding economic growth and high-quality employment through investment in growth sectors. In addition to new job creation, Japan is also promoting the enabling of workers to upgrade their skills and move into growth sectors through “investment in people”, to accumulate human capital by investing in vocational training, lifelong education etc.
Japan has a lower inflation rate than Europe and the United States. What are your country’s major sources of price stability?
It is said that the recent global inflation has been caused by a rapid rise in prices of commodities, including energy and grain, triggered by Russia’s invasion of Ukraine, supply-side constraints that have arisen during the course of recovery from the pandemic, and the tightening of labour market conditions.
The Embassy of Japan will continue working with JETRO and JBAS to provide precise and objective information on the political and economic situation in the region and to encourage high quality investments by Japanese companies
It has been pointed out that one of the reasons behind the lower inflation in Japan is the mindset and behaviour of Japanese people, based on the assumption that prices will not increase easily, which have become deeply entrenched because of the experience of prolonged deflation. In particular, service prices are seen as being less likely to rise because wages are not rising, and labour costs have not increased. In view of these circumstances, the central bank of Japan aims to achieve the price stability target of two per cent in a sustainable and stable manner, accompanied by wage increases.
Prime Minister Kishida has placed the economic empowerment of women at the core of his so-called “New Capitalism” agenda. How represented are women in the Japanese labour force and in the management structures of large companies?
The share of women in the total workforce was about 45% in 2021, and the number of female executives in listed companies has a growth tendency, but still only accounted for less than 10% of all executives as of July 2022. In addition, Japan is ranked 116th of 146 countries according to the Global Gender Gap Index published by the World Economic Forum last year, so Japan needs to further accelerate its gender equality efforts.
The foundation of the New Capitalism is a diverse society in which everyone can feel a sense of fulfilment in life. We hope to build a society in which people in various situations can realise their own dreams, regardless of their gender, and in which the percentage of women – as you have asked – is not even a topic of discussion.
According to Bloomberg’s latest survey on Foreign Direct Investment (FDI), Japan’s advantages are to be found in its business-friendly policies, strong talent and high productivity – particularly when it comes to technology and advanced manufacturing. How do you maintain such quality despite an ageing population?
As I mentioned, we aim to build a diverse society in which everyone can feel a sense of fulfilment in life and in which elderly people are also major players in society. It is expected that the experience, knowledge and wisdom of elderly people can be fully utilised in accordance with their wishes and motivation. Furthermore, I believe that various knowledge and experiences can be combined by providing reskilling opportunities, and this will lead to the creation of a positive environment for innovation. World Expo Osaka, Kansai, Japan will be held in 2025 and will provide a great opportunity to bring hope for the future through new technology. We look forward to witnessing cutting-edge technology from around the world at this Expo in Japan.
We have recently witnessed the arrivals in Serbia of some of very advanced Japanese companies. What attracts them to our country?
Ambassador Katsumata has already answered this question on various occasions, so I won’t repeat it. All I can say is that there is a firm friendly relationship between Japan and Serbia, which was built up by our predecessors over many years, and that Serbia has great potential and job satisfaction for many Japanese companies. I strongly believe that we try to take on new challenges together with the people of Serbia, while looking ahead to the new era, and this will lead to a further deepening of our friendly relations. It is for this purpose that I would like to underline that political and economic stability – not only in Serbia, but across the entire region – is extremely important for the further development of our relations.
How do you estimate the potential for new Japanese investments in the region?
Following recent large-scale investments in Serbia by Japanese companies, such as TOYO TIRES and the Nidec Corporation, ever-more Japanese companies are becoming interested in Serbia. In October last year, 14 Japanese companies from various sectors visited Serbia as part of a JETRO business mission and had the opportunity to meet President Vučić, PM Brnabić and other relevant, high-ranking officials, which further boosted interest in the region. The Embassy of Japan will continue working with JETRO and JBAS to provide precise and objective information on the political and economic situation in the region and to encourage high quality investments by Japanese companies.