Vested interests could hinder Japan's move to open markets

Japan's so-called "Big Bang", an ambitious programme of financial deregulation unexpectedly announced by the government on Monday night, was welcomed by business leaders yesterday, but faces formidable obstacles if it is to come fully into effect by its deadline of 2001.

Shunsaku Hashimoto, chairman of the Federation of Bankers' Associations of Japan, yesterday praised the government for its "plans to re-invigorate the financial market as a venue that can match New York and London". Opinion in Tokyo, however, was divided over whether political instability will consign the latest reform initiative to the sizeable scrap-heap of disappointed promises.

Details of the plan are vague, although finance ministry officials are presenting it as the most wide-reaching and detailed ever seen in Japan. Under the slogan "Free, Fair, Global", it is intended to cut through the regulatory red tape which is increasingly causing the Tokyo markets to lag behind international competition.

If fully realised it will open up competition across a range of financial sectors, providing lucrative opportunities for smaller Japanese companies, as well as foreigners, hitherto excluded by the iron grip of the ministry of finance. But it also raises the spectre of bankruptcies, especially for smaller firms, shakily emerging from a painful recession and banking crisis.

Prominent among the proposals are plans to increase competition by allowing banks, brokerage houses and insurance companies the right to participate in one another's markets. Government regulation of insurance premiums and stockbroking commissions will also be reduced, and greater access will be granted to Japan's vast, and hitherto closely regulated, pension market. Distinctions between commercial banks, long-term credit banks and trust banks will also be removed, enabling commercial banks to issue debentures and provide trust services, which at present are virtually unavailable to ordinary Japanese investors.

The outline for the plan speaks of legal reforms and changes in the tax and accounting regulations which would increase financial transparency and bring them closer to international standards. For instance, loopholes which make it difficult to calculate the precise assets of big corporations will be eliminated. The first step, an abolition of the rule which restricts foreign exchange transactions to authorised commercial banks, is set to be submitted to parliament in the new year.

The timetable for the rest of the programme is vague, and virtually all of the proposals have been fruitlessly floated before by various government panels and deregulatory bodies. But the high-profile nature of the announcement, endorsed by the Prime Minister, Ryutaro Hashimoto, less than a week after his formal re-election, will make it harder for politicians and bureaucrats to wriggle out of implementing them.

The biggest obstacle may be political. Mr Hashimoto's government is 12 seats short of a full majority and vested interests will ensure each new bill has a rough passage. Particular resistance can be expected from the many Japanese MPs who began their careers in the bureaucracy, and from big businesses which benefit from the current closed markets. "No matter how indispensable it may be for the Japanese economy in the 21st Century," concedes the draft plan, "such a thorough structural reform necessarily brings various pains."

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Doctor and Clara have their first real heart to heart since he regenerated in 'Deep Breath'
TV
Life and Style
Apple showed no sign of losing its talent for product launches with the new, slightly larger iPhone 6 making headlines
techSecurity breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Arts and Entertainment
Jamie Oliver
filmTV chef Jamie Oliver turned down role in The Hobbit
News
The official police photograph of Dustin Diamond taken after he was arrested in Wisconsin
peopleDownfall of the TV star charged with bar stabbing
PROMOTED VIDEO
Arts and Entertainment
Jeremy Clarkson, left, and Richard Hammond upset the locals in South America
tvReview: Top Gear team flee Patagonia as Christmas special reaches its climax in the style of Butch and Sundance
News
people
Sport
Ashley Barnes of Burnley scores their second goal
footballMan City vs Burnley match report
Arts and Entertainment
Peter Mayhew as Chewbacca alongside Harrison Ford's Han Solo in 'Star Wars'
film
News
i100
Arts and Entertainment
Man of action: Christian Bale stars in Exodus: Gods and Kings
film
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Tracy Emin's 1998 piece 'My Bed' on display at Christie's
artOne expert claims she did not
News
Ernesto Che Guevara and Fidel Castro, right, met at Havana Golf Club in 1962 to mock the game
newsFidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
News
Hackers revealed Oscar-winning actress Lawrence was paid less than her male co-stars in American Hustle
people
Arts and Entertainment
Clueless? Locked-door mysteries are the ultimate manifestation of the cerebral detective story
booksAs a new collection of the genre’s best is published, its editor explains the rules of engagement
Sport
Robin van Persie is blocked by Hugo Lloris
footballTottenham vs Manchester United match report
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

A timely reminder of the bloody anniversary we all forgot

A timely reminder of the bloody anniversary we all forgot

Who remembers that this week we enter the 150th anniversary year of the end of the American Civil War, asks Robert Fisk
Homeless Veterans appeal: Former soldiers pay their respects to a friend who also served

Homeless Veterans appeal

Former soldiers pay their respects to a friend who also served
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing

Scarred by the bell

The downfall of the TV star charged with bar stabbing
Why 2014 was a year of technological let-downs

Why 2014 was a year of technological let-downs

Security breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Cuba's golf revolution: But will the revolutionary nation take 'bourgeois' game to its heart?

Will revolutionary Cuba take 'bourgeois' golf to its heart?

Fidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
The Locked Room Mysteries: As a new collection of the genre’s best is published, its editor Otto Penzler explains the rules of engagement

The Locked Room Mysteries

As a new collection of the genre’s best is published, its editor explains the rules of engagement
Amy Adams on playing painter Margaret Keane in Tim Burton's Big Eyes

How I made myself Keane

Amy Adams hadn’t wanted to take the role of artist Margaret Keane, because she’d had enough of playing victims. But then she had a daughter, and saw the painter in a new light
Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Parting view of Ofcom chief... we hate jokes on the disabled

Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog, Ed Richards
A look back at fashion in 2014: Wear in review

Wear in review

A look back at fashion in 2014
Ian Herbert: My 10 hopes for sport in 2015. Might just one of them happen?

Ian Herbert: My 10 hopes for sport in 2015

Might just one of them happen?
War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?