Thoughts on Agriculture
On the topic of agriculture, Mr. Niinami did not mince words: reform of the Japanese agricultural industry, which has been government controlled for more than 40 years, is hard. The critical transition is to shift from many small farms operated by single farmers or families to larger professional operations. As a result, greater economies of scale could have the potential to be achieved and new entrants with experience in running large rice-growing operations could be attractive. When asked about ultimate catalysts for change, Mr. Niinami pointed out that the average age of a rice farmer in Japan was 70 years. At some point, retirement would occur and this, in combination with aggressive policies from the government, could lead to new ways that Japanese rice growers operate.
Thoughts on Health Care
Mr. Niinami’s big point on health care was the focus on preventive medicine, something that he said had never previously been encouraged in Japan at the government level. Mr. Niinami cited that approximately 9% of total payroll in Japan is paid to social security—if longevity continues to increase and people’s health in the latter years of their lives is poor, costs have the potential to skyrocket.
Conclusion: Putting Japan on “Global Equal Footing”
Mr. Niinami repeatedly said throughout the talk that one goal of Abenomics is to put Japan on a more “global equal footing.” In essence, Japan needs to solve the issues hindering competitiveness on the global stage, which include the stubbornly strong yen, deflation, high energy costs, high corporate taxes, high environmental costs and inflexible labor markets. While Mr. Niinami did not address all of these factors during his talk, he conveyed a distinct sense of confidence that the third arrow of Abenomics has strong potential, and we look forward to seeing the policies implemented over time.
Important Risks Related to this Article
Investments focused in Japan are increasing the impact of events and developments associated with the region, which can adversely affect performance.