March 13, 2013 / 1:51 PM / 5 years ago

Japan needs competition, not industrial policy: Rakuten CEO

TOKYO (Reuters) - Japan’s government should steer clear of picking industrial winners and losers and focus on opening the economy to trade and competition as the best way to boost growth, but not all those advising Prime Minister Shinzo Abe agree on which strategy to stress, a member of a panel on industrial competitiveness said.

“We don’t have explicit confrontations and we don’t yell at each other in meetings, but I am sure that there are different philosophies about how, and how much, the government should be involved in creating the strategy and reforming particular industries,” Hiroshi Mikitani, CEO of e-commerce operator Rakuten Inc 4755.OS told Reuters in an interview on Wednesday.

Abe is expected to announce as early as this week that Tokyo will seek to join talks on the U.S.-led Trans-Pacific Partnership (TPP) pact, despite opposition from Japan’s farm lobby and other business sectors which fear fallout from removing tariffs and less visible barriers to trade.

His government is also set to unveil a growth and competitiveness strategy in June - the final piece of a policy triad after fiscal spending and hyper-easy monetary policy. Financial markets see joining TPP talks as a harbinger of reforms needed to unlock growth in the long-stagnant economy.

Mikitani, a Harvard MBA who founded Amazon rival Rakuten in 1997, said TPP was part of Abe’s broader effort to revive growth in the world’s third-largest economy.

“We need to open these markets. We need to adopt global standards as much as possible. That is the only way that all these Japanese companies can become globally competitive and if they cannot do that, we should not be in that industry,” he said in fluent English.

“The Japanese people need to admit that what we need is to strengthen our strong parts and give up some of our weak industries to other countries and rely on them.”

CEO of e-commerce operator Rakuten Inc Hiroshi Mikitani, who is a member of Japan's Prime Minister Shinzo Abe's advisory panel on industrial competitiveness, speaks during an interview with Reuters in Tokyo March 13, 2013. REUTERS/Issei Kato

The days when Japan’s elite bureaucrats at the trade and industry ministry should decide what business sectors to promote are long past, Mikitani said, but not everyone agrees.

“Basically, METI (Ministry of Economy, Trade and Industry) has a strong incentive to recreate the government-led industrial policies that were very successful in the 1970s and 1980s. But this is like going back to national capitalism,” he said.

“We are very much against the idea of picking up particular industries, or particular technologies or particular companies to invest national money into,” he said, referring to some of his private sector colleagues on the competitiveness panel.

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“But certainly the bureaucrats are trying to give huge pressure.”

A string of Japanese blue-ribbon panels has crafted recommendations for structural economic reforms over the past decades, many of which have yet to be implemented.

But Mikitani said this time would be different because Abe, who returned to office after his conservative Liberal Democratic Party’s big December election win, was committed to change. Abe has since enjoyed popular support rates of around 70 percent.

“I think he believes deregulation will be the most important strategy for the revitalization of the Japanese economy and the competitiveness of Japanese industry,” he said.

“He knows that he will be more popular pushing for deregulation, ironically.”

Editing by Kim Coghill

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