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What will ‘Suganomics’ look like?


For Prime Minister Yoshihide Suga, now may not be the ideal time to become the nation’s leader, as steering a fragile economy will require a sensitive balancing act weighing economic activity against measures to limit the spread of the coronavirus.


That said, tough times come with opportunities. In fact, this could be the perfect time to push bold regulatory and administrative reforms, analysts say, which is increasingly looking to be what “Suganomics” might be all about. And the COVID-19 pandemic carved out the need for such reforms, especially in the area of digitalization of the public sector.


“Regulatory reform is my agenda. I intend to thoroughly work on this,” Suga said during a news conference on Monday after winning the ruling Liberal Democratic Party leadership race.


Under normal circumstances, drastic reforms tend to draw fierce opposition. But the new administration may be able to take advantage of the pandemic to drive forward what would normally be challenging policies.


One of the major goals is embracing digitalization, with Suga pledging to establish a new agency tasked with handling digital transformation policies, including increasing the use of My Number social security and tax identification cards more widely. As of Sept. 1, only 19.4 percent of the population had the cards.


In ordinary times, the government would not put a lot of political energy into integrating digital technologies to optimize work in the public sector. But the pandemic has laid bare the fact that Japan is lagging far behind other countries when it comes to effectively using digital tools.

The current situation has created a “tremendous opportunity” for the new administration to promote regulatory and administrative reforms, said Yoko Takeda, chief economist at Mitsubishi Research Institute.


“The momentum for digitalization has grown considerably, since people have seen that it really wasn’t working,” she said.


This was especially clear when the government launched a ¥100,000 cash-handout program in May.


Although many local municipalities accepted online applications, it turned out that the online process just added more work instead of making it more efficient. Municipal officials had to print online application forms and check them by hand to make sure there weren’t any errors, which contributed to delays to the distribution of the cash to some households.


“To facilitate digitalization in public administration, My Number cards are the key … but their usage has not spread widely enough. … We will launch a digital agency that will unify related policies now divided among several ministries to change the situation,” Suga said.


Economists have pointed out that the lineup of new Cabinet members, announced Wednesday, highlights Suga’s resolve to push for regulatory and administrative reform while continuing Abenomics, his predecessor’s namesake economic policy mix.


“It seems Suga has kept the ministers who were backbones of the Abe administration to highlight the continuity with the coronavirus response, but for the fields that he wants to tackle,” the new prime minister seems to have made thoughtful choices, said Yasuhide Yajima, chief economist at NLI Research Institute.


In an apparent aim to convince the public with his pledge to continue Abenomics, Suga did not change key personnel including Finance Minister Taro Aso, industry minister Hiroshi Kajiyama and economic revitalization minister Yasutoshi Nishimura, who is also in charge of the government’s COVID-19 response.


In his inaugural news conference as prime minister, Suga reiterated that he will continue Abenomics, which is based on fiscal spending, ultraloose monetary policy and a growth strategy aimed at boosting private-sector investment.


“Because of the coronavirus, the economy is unstable. I think the government was worried that markets would misunderstand if the Japanese government showed signs of a big economic policy shift,” Takeda said.


In the meantime, Suga tapped Takuya Hirai as minister in charge of information technology. Hirai will also oversee the creation of the new digital agency. Hirai assumed the IT minister post during the Abe administration and is well-versed in technology policies.


Suga, who under Prime Minister Shinzo Abe was the longest-serving chief Cabinet secretary ever, has also said he would undertake administrative reform.


“During my seven years and eight months as chief Cabinet secretary, I noticed that when policies are slow to move forward, it’s usually because of bureaucrats’ sectionalism and a penchant for sticking with precedents,” he said.


Suga appointed former Defense Minister Taro Kono as the minister in charge of regulatory and administrative reforms. Kono, who is popular among the public, has proved that he can be decisive: As defense chief, Kono opted earlier this year to cancel the plan to deploy two Aegis Ashore missile defense systems because it was not cost effective.


As for ways to help the economy recover from the coronavirus, the government will likely focus more on revving up business activities while keeping measures in place to contain the spread of infections.


Government spending has focused on defensive moves, such as boosting loans and providing subsidies to struggling companies, but “the government will shift its policy to protect people’s jobs more by actually getting the economy back up and running” through stimulus programs, such as the ongoing Go To Travel campaign, Yajima said.


While eyeing major regulatory and administrative reforms, moves that could take some time to implement, Suga will likely want to promote economic policies that will address people’s expectations in a more immediate manner, Yajima said.


A prime example is his pressure on major mobile phone carriers to lower their data fees. In August 2018, while serving as the government’s top spokesman, Suga dropped a bombshell, claiming that the three major carriers — NTT Docomo Inc., KDDI Corp. and SoftBank Corp. — were not competing enough and making too much profit.


Since then, the carriers have introduced lower-priced data plans. But Suga is apparently not satisfied, as he addressed it again during a news conference Wednesday


“I’ve always thought there are still a lot of things that are beyond the pale from the ordinary people’s view,” said Suga, adding that the three major carriers are charging high prices even though they are using public infrastructure.


By listening to the voice of the people, “I’ll try to see through what’s normal (to people) and take bold actions to make it happen,” Suga said.

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