BOSTON (Reuters) - Mitsubishi Corp (8058.T) Chairman Yorihiko Kojima said on Wednesday that Japan’s economic reform agenda could, if successful, pave the way for the company’s expansion in the country’s energy sector.
A sweeping economic policy overhaul by Prime Minister Shinzo Abe aimed at pulling the world’s third largest economy out of a 15-year deflationary period - a policy dubbed “Abenomics” - has succeeded in building market optimism, he said.
“The challenge now is converting this positive sentiment into genuine improvements in the real economy,” he said at a luncheon sponsored by Boston College’s Chief Executives’ Club of Boston.
“This is related to the government regulations, therefore we are always communicating,” he said, referring to Mitsubishi’s interest in expanding its energy business in Japan.
Since taking office in December, Prime Minister Abe and the Bank of Japan have gambled on massive fiscal and monetary stimulus to spark life in the economy, and signs of an upswing are accumulating.
But pessimists have argued that the benefits of “Abenomics” may be short-lived and will not prompt companies to spend more on investment and wages, unless they are accompanied by a raft of structural reforms like tax cuts and changes to labor laws.
Mitsubishi Corp is a multinational Japanese company covering finance, banking, machinery, chemicals, food and energy businesses. It employs about 60,000 people in approximately 90 countries and is part of the Mitsubishi Group of Companies, best known in the United States for its automobile brand.
While Mitsubishi Corp is already a major independent power producer in overseas markets, it has seen its options limited in Japan under previous governments that have permitted large regional monopolies to dominate the sector.
Prime Minister Abe has signaled an opening up of Japan’s electricity market to increased competition, and is considering whether to reduce Japan’s dependence on nuclear energy in the wake of the massive earthquake and tsunami that crippled the Fukushima Daiichi plant in 2011.
“At this point the energy mix, we have to change it. About 30 percent is nuclear power, and this will be going down to 20 percent or something,” Kojima told Reuters on the sidelines of the luncheon. “We are always communicating with the electric companies or with manufacturers. We have ideas about how to participate and we are studying them.”
He said Abe had an opportunity to push through his reform agenda because his party had won both upper and lower house elections, ending a period of deep political division in Japan.
“It has been quite a while since Japan enjoyed this kind of political stability and the expectation is that Mr. Abe will remain at the helm for the next three years at least,” he said.
Kojima credited Abe’s monetary and fiscal policy measures for a recovery in the yen and a near 50 percent increase in the NIKKEI stock index since he took office in December.
He added that the recent announcement that Japan will host the 2020 Summer Olympics, as well as Japan’s participation in the Trans-Pacific Partnership negotiations - a free trade zone scheme led by the United States - were providing momentum for Abe’s economic agenda.
He also said Abe’s plan to impose a consumption tax in Japan to counter the country’s fiscal deficit was risky, but probably necessary for Japan’s long-term prospects.
“Doing this while at the same time stimulating the economy to grow will not be easy, but I think it will be essential for Japan to succeed,” he said.
He said that Mitsubishi was also interested in further investing in North American shale gas and strengthening existing ties with the U.S. defense industry.
Writing by Richard Valdmanis; editing by Jim Marshall