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."

News
A Brazilian wandering spider
news

World's most lethal spider found under a bunch of bananas

News
people
Arts and Entertainment
Tim Wonnacott dancing the pasadoble
TVStrictly Come Dancing The Result
Sport
Mario Balotelli pictured in the win over QPR
footballInternet reacts to miss shocker for Liverpool striker
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
BBC's Antiques Roadshow uncovers a TIE fighter pilot helmet from the 1977 Star Wars film, valuing it at £50,000
TV

TV presenter Fiona Bruce seemed a bit startled by the find during the filming of Antiques Roadshow

News
people

Comedian says he 'never laughed as hard as I have writing with Rik'

Sport
Steven Caulker of QPR scores an own goal during the Barclays Premier League match between Queens Park Rangers and Liverpool
football
News
i100
Life and Style
tech
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

Operational Risk Manager - Asset Management

£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...

Project Coordinator - 12 month contract

£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...

IT Operations Manager - London - £55,000

£50000 - £55000 per annum + bonus + benefits: Ashdown Group: IT Relationship M...

Banking Solicitor NQ+

Highly Attractive Salary : Austen Lloyd: NOTTINGHAM - BRILLIANT FIRM - You wil...

Day In a Page

Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album
Hugh Bonneville & Peter James: 'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'

How We Met: Hugh Bonneville & Peter James

'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'
Bill Granger recipes: Our chef's heavenly crab dishes don't need hours of preparation

Bill Granger's heavenly crab recipes

Scared off by the strain of shelling a crab? Let a fishmonger do the hard work so you can focus on getting the flavours right
Radamel Falcao: How faith and love drive the Colombian to glory

Radamel Falcao: How faith and love drive the Colombian to glory

After a remarkable conversion from reckless defender to prolific striker, Monaco's ace says he wants to make his loan deal at Old Trafford permanent
Terry Venables: Premier League managers must not be allowed to dictate who plays and who does not play for England

Terry Venables column

Premier League managers must not be allowed to dictate who plays and who does not play for England
The Inside Word: Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past

Michael Calvin's Inside Word

Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past