Japan to double investment: PM

In a speech designed to put some flesh on the bones of a much-hyped economic policy, Shinzo Abe said he would make Japan the “engine of world recovery”, slashing the bonds that discourage firms from investing.

Abe pledged to create a “positive cycle of growth” with an array of business-friendly measures and a renewed push to shift resources to sectors with high growth potential, such as infrastructure, medical services and energy.

“If we could achieve this growth scenario, per capita gross national income will reverse the current shrinking trend and eventually reach an annual three percent growth,” he said.

“Then 10 years from now, I believe we can raise it by more than 1,5 million yen from the current level,” he said. Japan’s per capital GNI stood at US$45 180 in 2011, 17th in the world.

Since coming to power in December, the conservative premier has moved to revive the world’s third largest economy and end years of deflation with a plan dubbed “Abenomics”, that he says involves the firing of three “arrows”.

The first two — huge government spending and a flood of easy money from the central bank — have already been fired, sending the yen plunging and the stock market soaring.

The third — structural reforms — is more tricky and remains to be fully fleshed out later this month, but is intended to trigger an “explosion of private sector vigour”, Abe said.

Abe’s speech yesterday comes just over a month before expected elections for the upper house of parliament.

His Liberal Democratic Party swept the board in a December poll for the more powerful lower chamber. But with the House of Councillors still controlled by the opposition, Abe faces a crimp on his legislative agenda.

Still-soaring public approval ratings look set to hand him a handsome victory in the election, expected around the middle of July, relieving any potential bottleneck.

Commentators point out that yesterday’s speech was more of a list of targets than a road map on how they would be achieved, and must be seen in the context of that upcoming plebiscite.

The markets offered a more immediate judgement, with the headline Nikkei 225 index tumbling 3,83 percent to close at a two-month low of 13 014,87.

“I didn’t expect much out of this but there wasn’t much indeed,” said Masamichi Adachi, senior economist at JPMorgan Securities Japan, referring to Abe’s speech.

“There are a series of meaningless figures. I don’t know how they can achieve them,” he told Dow Jones Newswires. — AFP.