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Abe wants more progress in corporate governance

[TOKYO] Japanese Prime Minister Shinzo Abe pledged to push for further improvements in corporate governance, including urging companies to make more progress in unwinding cross-held shares.

"We must let the governance system make a tangible difference," Mr Abe said in a speech at Bloomberg's New York headquarters on Tuesday, days after he announced new targets for expanding the economy by 20 per cent and halting population decline. "We are going to build a new system whereby CEOs and other board members should be transparently selected, and cross shareholding further dissolved."

Mr Abe, 61, was speaking in English to an audience of around 260 investors. The decades-long practice of cross-held shares has come under fire as the government pushes for better use of capital in a nation with an aging population and shrinking birthrate. While the three largest banks have already pledged to sell some holdings, 8.5 trillion yen (US$71 billion) more in such shares will be offloaded in the next few years, according to UBS Group AG's wealth management unit.

Mr Abe came to office in Dec 2012 touting a three-pronged economic revival plan - unprecedented monetary easing, flexible fiscal policy and regulatory reform - to defeat the deflation that has dogged Japan for more than a decade. While his policies have weakened the yen, lifted stock prices and boosted the profits of some bigger companies, the economy has stuttered with contractions in four of the ten quarters under his administration.

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The BOJ's main inflation gauge dropped into negative territory last month, marking the first minus figure since April 2013. In his remarks, Mr Abe said the nation has successfully shrugged off the "deflation mindset." The government will focus on putting the economy on the path to robust growth via a new policy program called Abenomics 2.0., Abe said.

"I am determined, in cooperation with the Bank of Japan, to do whatever it takes to put the economy on a robust growth track," Mr Abe said.

Under Abenomics 2.0, the government will aim to boost the economy to 600 trillion yen, up about 20 per cent from where it is now, and to put more money aside to support early education and bolster the social welfare system.