Prime Minister Shinzo Abe sought Monday to win the confidence of Asia-Pacific business leaders in Japan’s economic policy, pledging to pursue growth and fiscal discipline at the same time.
Speaking at an Asia-Pacific Economic Cooperation forum business event, Abe also called on APEC members to lead the world in developing advanced infrastructure in sectors such as energy and transport, saying Japan is ready to provide know-how to that end.
Referring to his recent decision to raise Japan’s sales tax next April for the first time in nearly 20 years, Abe said, “Economic revival and fiscal restoration can go together, and there is no other way (for Japan). That is my conclusion.”
“It is essential to rehabilitate public finances and maintain confidence in the state as we go for revitalizing the economy,” he said in his speech to the APEC CEO summit.
Amid concern that the tax hike, aimed at covering swelling welfare costs, could undermine Japan’s nascent economic recovery, Abe said the government will introduce a 5 trillion yen stimulus package to cushion the impact on business and household sentiment. The sales tax rate is to be raised from 5 to 8 percent.
Japan is weighing up tax incentives to rekindle the appetite for fresh capital spending, he said, adding that the government will also pursue deregulation and support businesses in the utility, farming and medical industries.
Abe said such policies constitute the “third arrow” of his economic policy package dubbed “Abenomics,” which also involves bolder monetary easing by the Bank of Japan as well as flexible budgetary spending to accelerate the country’s battle against chronic deflation.
“I can no longer lose time for necessary reforms,” the premier said.
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