JAPAN is a steadfast ally and friend. Japanese investments in our country are second only to those of the United States. Militarily, Japan is our second most powerful and closest ally. Japan is one of our biggest export destinations. And our OFWs in Japan are among the most well-paid—and are now better treated.
Japan is also the largest provider of government aid (ODA) to our country. And Japanese foundations, NGOs and civil society organizations (CSOs) are among the most active in working with Filipinos in providing humanitarian, educational and many other socio-economic development programs to combat our massive poverty problem.
But Japan, the world’s third-largest economy (it was the second until China overtook it some years ago; the first is, of course, the United States), has been suffering from a sluggish, in fact a virtually non-growth, economy for about two decades. How much more and greater the economic and social-development partnerships and joint ventures the Philippines and Japan would have if it did not have its fiscal and other economic problems!
Some experts think the Japanese economy needs drastic structural reforms. Prime Minister Shinzo Abe has begun to introduce some. But he has slowed down in this for fear that many corporations would be adversely affected, and this would make the economy worse.
Japan’s government must balance its budget and reduce its large national debt. One of the solutions to these has been to raise consumption taxes. But that would make the prices of basic commodities go up—and make low-income households suffer. Japan is a democracy. And Prime Minister Abe’s Liberal-Democratic Party administration, which has been in power for four years, needs to win the next elections.
Happily, Japan’s is quite an educated and well-informed public. The surveys show that slightly more people approve of than dislike the Abe government’s awaited consumption tax hike of 10 percent.
Mr. Abe was supposed to announce the consumption tax increase last week but postponed doing so—again. To make the decision palatable to the experts and that segment of the Japanese people who like the tax increase because it would mitigate the serious national debt and budget problem, he and his aides even tried to make it appear that the global economy was again, possibly, facing a crisis and could go south.
This became a propaganda disaster. Opposition figures and neutral newspapers pointed out the false spin and correctly identified its motivation: PM Abe’s effort to justify not postponing his announcement of a new tax hike which would be in force next year.
Aside from being reluctant to order the tax hike for electoral motives, Mr. Abe probably also now thinks that Japan’s economy just will not benefit from the tax hike.
His government has already pumped massive financial stimuli and the Bank of Japan has imposed negative interest rates for many years, but these have not raised consumer prices.
This is because Japanese consumers are being cautious about spending. They are not buying in the hope that prices will be better on a future day when things are more settled. There is a deflation in Japan.
But that is only one of the Japanese economy’s problems.
In many ways, Prime Minister Abe and his ministers are facing a tougher nut to crack than President-elect Rody Duterte and his Cabinet will face beginning on the afternoon of June 30.
Let’s pray for Japan, our friend and ally, its economy and PM Abe.
And, of course, let’s pray even harder for our own country and our incoming President Duterte.