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Japan's ruling party proposes huge stimulus plan
AFP - Thursday, October 7
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Japan's ruling party proposes huge stimulus plan
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TOKYO (AFP) - – Japan's ruling party on Wednesday unveiled its proposal for a 4.8 trillion yen stimulus plan to help boost a flagging economy beset by a strong currency and persistent deflation.
The measures, worth 58 billion dollars, will focus on five areas set last week by Prime Minister Naoto Kan: employment, economic growth, social welfare, stimulating regional economies and deregulation.
The Democratic Party of Japan also recommended that Kan's government set up a national investment fund with the country's vast currency reserves, but did not elaborate, Dow Jones Newswires reported.
To finance the planned economic measures, the government plans to use fiscal 2009 surplus funds and a tax revenue surplus for fiscal 2010, Jiji press reported.
For Kan, a fiscal hawk who focused his early agenda on efforts to cut spending and slash Japan's huge debt, which is running close to 200 percent of gross domestic product, how the budget is funded will be crucial.
His party's thin majority in parliament's Upper House may also complicate efforts to get the bill passed.
The ruling party recommended that the government uses the strong yen to boost overseas investment to secure energy resources and strategic minerals crucial in making mobile phones, digital cameras and hybrid cars.
Japan presently secures the bulk of its rare-earth metals from China, a policy that has been under the spotlight during a recent territorial spat with Beijing, which has denied industry claims that it moved to block shipments.
The export of Japanese technologies is also to be increased in a bid to help drive growth, targeting exports crucial to the construction of high-speed railways, nuclear power plants and other large infrastructure projects.
The latest measures also propose offering further financial support to small and medium-sized companies struggling with the impact of a strong yen, which has hit the export sector driving Japan's growth.
The government is expected to officially approve the stimulus package on Friday and then submit a supplementary budget to parliament to secure the funds needed to implement the measures.
The government in September approved a 915 billion yen stimulus package financed by reserve funds to create around 200,000 jobs and lift the country's GDP by about 0.3 percent, but that was criticised as not being enough.
The Bank of Japan on Tuesday adopted a near zero-rate policy and new pump-priming measures Tuesday, but analysts questioned what long-term impact the action will really have on the flagging economy.
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