Japan business lobby forecasts big capex growth if govt adopts sweeping reform

[TOKYO] Japan's biggest business lobby said on Thursday that capital spending could grow 14 per cent to 81.7 trillion yen (S$936.90 billion) over the next three years if the government adopts sweeping reforms, including a swift cut in the corporate tax rate.

The projection was presented in a document that Keidanren submitted to a meeting between cabinet ministers and business leaders on expanding business investments and raising wages.

The move comes as Prime Minister Shinzo Abe piles pressure on companies to lift investment and raise pay to spur economic growth, as his "Abenomics" recipe of monetary stimulus, public spending and reform continues to struggle for traction.

Keidanren also said in the document that it would urge companies to consider steps in the way that reflect the actual business conditions in raising annual pay and improving working conditions.

Sadayuki Sakakibara, chairman of Keidanren, had earlier demanded the government lower the effective corporate tax rate - among the developed world's highest - to below 30 per cent as soon as possible to spark business investment.

The government cut the corporate tax rate to 32.11 per cent in the current fiscal year from last year's 34.62 per cent, and plans to reduce it to 31.33 per cent next fiscal year.

REUTERS