Tokyo's reforms blamed for slump

The Japanese government yesterday came under fire from one of the country's leading industrialists over the recent collapse in share prices on the Tokyo stock market.

Taizo Nishimuro, president of Toshiba Corporation, said the slump in share prices was due to disappointment at the slow pace of deregulation in Japan, and scepticism about the commitment of the Prime Minister, Ryutaro Hashimoto, to genuine reform. "They move too slow. Hashimoto is not acting on what he is talking about. That is the dilemma the government is facing. The stock market is an expression of disappointment," he said.

Shares on the Tokyo Stock Exchange fell yesterday for the sixth time in seven days, with the Nikkei 225 stock index sinking 354 points to 17,334.90, a drop of 2 per cent. The Topix Index was also down 2 per cent, having gone down nearly 10 per cent since the new year, and 17 per cent in the past six months.

Mr Nishimuro's remarks express a widespread fear among Japanese businessmen that the so-called "Big Bang", a programme of deregulation among banks, insurers and brokerage houses announced by Mr Hashimoto in November, will not materialise quickly enough to boost Japan's flagging economy.

Formidable vested interests - from politicians, as well as businessmen, closely tied to protected industries - stand in the way of Mr Hashimoto's reforms, and many observers in Tokyo are sceptical that they can be meaningfully implemented by the summer. There is also unease about the draft budget for 1997, which includes tax rises, but no spending cuts.

At the same time, the fear of hasty reform is also causing alarm, because of the uncertain state of Japan's banks, which are still saddled with debts resulting from the collapse of land prices in the early 1990s.

Hamish McRae, page 20

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