Japanese Premier Suga Vows to Defeat Virus in Policy Speech

Japanese Prime Minister Yoshihide Suga vowed in a speech to parliament to overcome the latest wave of coronavirus infections and laid out environmental and digitization plans he said would bolster the economy.

Suga, who has seen his popularity slide over his handling of the pandemic as case numbers rise, said his government would pass a law adding penalties and incentives to a law on virus management.

Japanese Premier Suga Vows to Defeat Virus in Policy Speech

The premier, who took office in September, said his plans for green and digital transformations would be new sources of growth and that the government would support companies that develop cutting edge technologies such as next-generation solar cells, storage batteries and carbon recycling.

Japan will expand the use of hydrogen and offshore wind energy, introduce carbon pricing and plant forests in order to meet the target of carbon neutrality by 2050, Suga said. The country’s green growth strategy is expected to bring an annual economic boost of 190 trillion yen ($1.8 trillion) by the time the goal is met, he said.

Separately, Finance Minister Taro Aso said there’s no need to change the extra budget for the year ending March or the regular budget for the next fiscal year because the government has reserve funds to deal with the pandemic. The extra budget, which needs parliament’s approval, will fund parts of Suga’s 73.6 trillion yen economic stimulus plan.

Japanese Premier Suga Vows to Defeat Virus in Policy Speech

A state of emergency that began this month calls for voluntary restrictions until Feb. 7 in 11 prefectures, which produce roughly 60% of the nation’s economic output. The median estimate of analysts surveyed by Bloomberg indicates the economy will contract again in the three months through March, halting its recovery from a record slump last year.

Other policies laid out in Suga’s speech include:

  • Pressing ahead with corporate governance reforms and requiring at least a third of the directors at major companies to be from outside the firm
  • Seeking to create a global financial center, Japan will change laws to exempt overseas assets of non-Japanese from inheritance taxes, and apply a flat tax rate of 20% to income tied to investment performance
  • In a bid to take a lead in building post-Covid-19 world order, Suga will meet Joe Biden at an early stage and further strengthen bonds with the U.S.
  • The government is planning a new law to prevent inappropriate ownership or use of land including important defense facilities and remote islands
  • Japan will urge South Korea to take appropriate steps on bilateral ties, which are in a “severe” state
  • The government will proceed with plans for the summer Tokyo Olympics, which will be a chance to show that the world has defeated the coronavirus
  • The government will work with the Bank of Japan to support regional financial institutions

©2021 Bloomberg L.P.

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