Akira Amari crafts plans for Japan’s economic overhaul
Japan’s minister for economic and fiscal policy has a big challenge: to craft policies for the prime minister’s sweeping economic overhaul.
Akira Amari, Japan’s minister for economic and fiscal policy, has so much on his plate that all of his titles don’t fit on his business card.
He’s also the minister in charge of economic revitalization and reforming social security and taxes and the head negotiator for the Trans-Pacific Partnership trade pact.
Sitting in his central Tokyo office across the road from Prime Minister Shinzo Abe’s, Amari furrows his brow as he considers his challenge: overturning decades-old regulations and spurring investment to revive the world’s third-biggest economy.
Abe, elected in a December landslide, is unleashing the most sweeping overhaul in a generation to end 15 years of deflation and spark growth. He announced a $105 billion spending boost in January.
In April, Haruhiko Kuroda, his hand-picked Bank of Japan governor, pledged unprecedented monetary easing to double the amount of money circulating in Japan’s economy.
Now, in what the prime minister calls the third arrow in his quiver, Amari, 64, is crafting policies that will help “Abenomics” take off.
Abe, 58, wants to loosen rules governing industries from health care to agriculture and stimulate business expansion with tax breaks. He aims to increase annual private investment to 70 trillion yen, the level before the 2008 financial crisis, in three years.
He’s shooting for an average annual growth rate of about 2 percent during the next decade. Japan’s economy expanded at an annualized rate of 2.6 percent in the three months through June.
“Amari may not be well-known globally like Kuroda, but what investors are looking at right now is to what extent Japan will be able to push through deregulations and structural reform,” says Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management in Tokyo.
Amari says he’s confident Abe’s reforms will reignite Japan, which has been stuck since real estate and stocks crashed in the early 1990s.
“The growth strategy basically will light up the 500 trillion yen economy like a large pile of firewood,” Amari says.
Failure would be catastrophic, Deputy Economy Minister Yasutoshi Nishimura says. In a whirlwind tour in June and July, he and Amari hit the road to sell the plan.
“This is the last chance for the Japanese economy,” Nishimura says.
Amari, who traces his ancestry to a 16th-century samurai general, is feeling the heat as Abe prepares to release detailed proposals this fall.
“Amari is the key man whose efforts are going to bring a meaningful growth strategy or disappointment,” Muto says.
During his four decades in politics, Amari dealt largely with commerce and industry.
Today, Amari is leading Japan’s negotiations to join the Trans-Pacific Partnership (TTP) trade zone. Abe wants to increase commerce with countries with which Japan has free-trade agreements to 70 percent by 2018 from 19 percent in 2012.
In his role as social-security reformer, Amari will need to narrow a funding gap in welfare that’s spiraling upward as more Japanese retire.
Amari is girding for battles with Japan’s strongest interests to make Abe’s plan a reality. The TPP pact that he’s negotiating offers Japan’s exporters more access to the U.S. and other markets.
Many Japanese farmers oppose the deal because it would cut tariffs that protect domestic rice, milk, meats, wheat and dairy goods — currently as high as 778 percent.
Abe wants to expand exports of agricultural, food, forestry and fishery products to 1 trillion yen by 2020 from 450 billion yen in 2012. He will have to deal with competing government ministries jockeying for billions of yen in health-care-research funding.
He intends to create a Japanese version of the National Institutes of Health to oversee medical research, angering bureaucracies that may lose control of their budgets.
“It’s doubtful whether Amari can fight a head-to-head battle against the vested interests,” says Hiroyuki Kishi, a former Trade Ministry official who’s now a professor at Keio University’s Graduate School of Media Design near Tokyo.
“Rather than a reformer, he is the kind of person who takes a split-the-difference approach between reformers and bureaucrats,” says Kishi, who worked with Amari when Amari was acting chairman of the Liberal Democratic Party’s policy research council from 2005 to 2006.
Tsuneyoshi Kobayashi, the mayor of Atsugi, a city 28 miles southwest of Tokyo where he and Amari grew up, didn’t expect his boyhood friend to become a politician.
“He was very genuine, rather shy and not very proactive,” Kobayashi says.
Amari’s father, Tadashi, proved a motivator. The elder Amari lost twice in national elections before winning a seat in the lower house of Parliament in 1976.
“For a person who worked as hard as he could for the sake of the people, it’s wrong that he didn’t receive recognition,” Amari says. “I thought I’d try to rectify this.”
Now, three decades later, Abe is betting that Amari, who graduated in 1972 from Keio University, where he majored in politics, will help steer Japan’s next expansion.
Amari holds the keys to the biggest shift in Japan’s economy since the 1980s, when his predecessors embraced a surge in the yen, introduced a sales tax and sold the national railways. A generation later, Amari is embarking on a task that he measures in personal terms:
“I will do my best to meet the challenges so I don’t shame the blood of my ancestors,” he says.