Takenaka Urges Japan’s Suga to Make Mark With Quick Progress
(Bloomberg) -- Yoshihide Suga should show his ability as Japan’s new prime minister with quick progress on one of his goals such as cutting mobile phone fees, according to former economy minister Heizo Takenaka.
“Managing the government is very hard and he doesn’t belong to any faction,” Takenaka said of his friend Suga in an interview Tuesday. “He needs an early small success to show that his cabinet is capable.”
Suga, the long-serving chief cabinet secretary, is set to become prime minister Wednesday after having won the ruling party’s leadership election. He’s pledged to keep the macro-economic policies of his predecessor Shinzo Abe while pursuing reform.
In recent days Suga has stepped up pressure on Japan’s phone companies to lower their fees, something he’s been advocating for years. This week, he reiterated that cell phone charges could be cut by 40%.
Success in cutting those costs for households would have an effect similar to halving the 10% sales tax, Takenaka said.
Takenaka is well-known in Japan as an architect of reforms undertaken by former Prime Minister Junichiro Koizumi during the early 2000s. He pushed Japan’s banks to write off crippling bad loans and also oversaw plans to privatize postal services.
Takenaka and Suga have been close since at least 2005 when Suga served as his deputy at Japan’s internal affairs ministry, where Takenaka was minister.
Suga is the best person to carry on with Abe’s policies and is likely to make progress on reforms where his old boss made little headway, Takenaka said.
On monetary policy, Takenaka said there’s no need for Suga to press the Bank of Japan to abandon its 2% inflation target even though the goal is looking ever more difficult to meet. He also said Suga shouldn’t waste political capital on trying to get employment added to the BOJ’s mandates, a change that would require a lot of time and effort.
“There won’t be any change to the framework in which the BOJ independently decides monetary policy, while sharing its policy targets with the government,” Takenaka said.
The BOJ should be ready to do more to help corporate funding if the economy deteriorates in the event of a second wave of the coronavirus pandemic, Takenaka said. One possibility is direct lending to small companies by the central bank along the lines of the Federal Reserve’s Main Street Lending Program, he said.
©2020 Bloomberg L.P.