The Japan External Trade Organization New York (JETRO NY) released a newsletter today analyzing the formation of an Industrial Rebirth Council in Japan. It can be viewed here. A summary is posted below.

JAPAN'S ONGOING REFORM PROGRAM

Japan's maturing economy, its aging population, globalization and the increasing importance of information technology have necessitated dramatic changes to the way business is conducted in Japan.. To maintain its dynamism, a comprehensive "Program for Economic Structural Reform" was enacted in 1996. This, and other, policy initiatives have helped Japan make a dramatic break with its past, based on the realization that comprehensive reform is essential to sustain its long term competitiveness.

INDUSTRIAL REBIRTH COUNCIL ORGANIZED IN JULY 2000

Chaired by Prime Minister Mori, an Industrial Rebirth Council was organized last July. It is composed of Government Ministers and CEO's of major corporations including Sony, Fujitsu, Toyota, NTT and Toshiba. On August 31st, the Council held its second meeting to focus on the reforms needed to resolve key issues including:

(NOTE: Specific reform measures outlined in full text of newsletter)

* Accentuating the dynamism of corporate management;
* Revitalizing small and medium businesses;
* Promoting technological innovation and creation of growth industries;
* Strengthening human resource development and labor flexibility;
* Meeting the needs of an aging population;
* Enhancing environmental protection and proper waste disposal; and
* Strengthening the cost competitiveness of doing business in Japan.

FOREIGN DIRECT INVESTMENT RISES DRAMATICALLY

With many reforms taking hold and more on the horizon, the Japanese economy has resumed positive GDP growth for the first time in two years. Latest figures show 1.0 % growth for the 2nd quarter of 2000, an annual rate of 4.2%. Business sentiment is also starting to rise.

Direct investment has grown almost 100% annually over the last two years, reducing the gap between outward versus inward flows from almost 13:1 in FY1995 to slightly over 3:1 in FY1999. GM, Daimler-Chrysler, Renault, Ripplewood, Costco, and Amex are a few of the many foreign companies who made major investments in recent years.

While the preliminary evidence points toward success, the Japanese government intends to redouble its efforts to accelerate and expand the initiatives needed to create an attractive business environment for both foreign and domestic corporations and capital.

--30--flb/ny*

CONTACT: JETRO NY
Hidehiko Nishiyama
Executive Director
Tel: 212-997-0416, Fax: 212-997-0464
E-mail: nishiyamah@newyork.jetro.org