Central Japan Railway Co. has effectively scrapped its plan to single-handedly shoulder the projected ¥9.1 trillion construction cost for the Shinagawa-Osaka Linear Chuo Shinkansen, after the government last month green-lighted a ¥3 trillion payment to the company—also known as JR Tokai—under its Fiscal Investment and Loan Program (FILP).
The funding for the maglev train project is incorporated in the "big-boned policy" (guidelines used to draft fiscal-related policies), which the Cabinet endorsed on June 2.
"It's a complete about-face," said a reporter at a major national daily.
In an attempt to stride into the future, Mizuho Financial Group Inc. (MHFG)—a major Japanese megabank group—has undertaken a gigantic project to update its accounting computer system. However, the move is proving less of a walk in the park, and more of a death march.
In the software industry, the term "death march" is used to refer to harsh working conditions on such projects as software development, or desperate circumstances surrounding a project wherein engineers struggle with enormous workloads, with little chance of meeting deadlines.
It is said the system engineers presently developing MHFG's accounting computer system are literally working themselves to exhaustion.
Hitachi Ltd., a Japanese conglomerate with annual sales of about ¥10 trillion, was once considered a giant of the industrial world, but now it appears to be a timid mouse. Disconcerted employees from Hitachi's Nuclear Energy Business Unit are lamenting the company's inability to come up with a long-term plan for survival.
"The future of producing boiling water reactors has a limit," one employee said. "If we don't quickly enter the market manufacturing pressurized water reactors, we won't be able to compete with major global rivals."
Since the March 2011 meltdowns at the Fukushima Daiichi Nuclear Power Plant, Japan's domestic nuclear power generation market has shrunk. A realignment of the nation's three main reactor makers has become an urgent priority. This consolidation will determine the survival (or otherwise) of Hitachi, which develops boiling water reactors; Mitsubishi Heavy Industries Ltd., which constructs pressurized water reactors; and Toshiba Corp., which deals with both types. Pressurized water reactors are the dominant reactor in the global nuclear energy market, so Hitachi has contented itself with being a minor player in the Far East. Hitachi presently has a golden opportunity to redress this situation, but has yet to act upon it.
The following is an interview with Professor Mitsuru Iwamura of Waseda Business School.
Sentaku: As the yen continues to strengthen, the government and mass media are saying things like "the rising yen causes problems." But is this really the case?
Iwamura: Absolutely not. The stronger the yen gets, the more benefits there are for the public. When the yen is weak, export industries benefit; when it's strong, import industries benefit. As for exports, many of the big industrial firms, such as carmaker Toyota, experience robust sales, while [Chinese and other foreign tourists] go "binge shopping" when the yen is weak, so policymakers get behind it, and the media reports favorably on it, too. On the other hand, when the yen is strong, the price of gasoline and electricity falls and it's much easier for people to get by financially. Prime Minister Shinzo Abe has said all along that it's better to have a weak yen, but the problem really isn't quite as straightforward as that. The prime minister's understanding of economic affairs is somewhat insufficient.
When the Nihon Keizai Shimbun (Nikkei) daily reported on June 8 that Bank of Tokyo Mitsubishi UFJ (BTMU) is set to relinquish its status as a primary dealer of Japanese government bonds, speculation swirled among market players that Japan's largest bank is trying to get even with the Bank of Japan for unexpectedly introducing negative interest rates in February as part of its fight against deflation.
There was good reason to suspect BTMU's motives. At a lecture meeting in Tokyo in April, BTMU Chairman Nobuyuki Hirano (who also is president and group CEO of Mitsubishi UFJ Financial Group) publicly expressed dissatisfaction with the Japanese central bank: "Because banks will be unable to pass on negative interest to customers, [negative interest rates] will reduce their net interest margins and sap their financial strength. The short-term effects are clearly negative."
In May, Nissan Motor Corp. moved with lightning speed to bail out the embattled Mitsubishi Motors Corp., which was plunged into yet another battle for survival—its third to date—after admitting three weeks earlier it had falsified fuel efficiency test data.
Nissan will take de facto control of Mitsubishi with a 34 percent stake in the company after it completes its acquisition of 506.6 million shares at a cost of ¥237 billion by the year's end. Nissan will become Mitsubishi's largest shareholder—boasting a larger stake than any other top Mitsubishi Group company—thus effectively obtaining management rights. Four of Mitsubishi's 11 board members are expected to hail from Nissan.
Prime Minister Shinzo Abe's trumpeted plan to export conventionally powered submarines to Australia suddenly came to an unsuccessful end when Canberra decided to place the order with a French maker.
This was not merely a transitory case of Japan failing to sell a piece of defense-related equipment abroad. Abe had treated the submarine export deal as a top priority in his attempts both to counter China's maritime ambitions and to push his economic growth strategy.
U.S. President Barack Obama deeply impressed the Japanese public with the speech he delivered in the world's first atom-bombed city of Hiroshima on May 27. But on his home turf, he is clandestinely pushing a plan to modernize the U.S. nuclear arsenal.
The plan, with its development cost estimated at $1 trillion over the next 30 years, is aimed at downsizing missiles capable of carrying nuclear warheads and improving their mobility with new delivery systems and platforms.
Another month, another Mizuho Bank executive behaves disgracefully—and adds a fresh twist to the ongoing reshaping of the bank's awkward internal balance of power.
This time, the executive's despicable conduct occurred at a party in April, a time of year when many Japanese companies welcome in a new batch of recruits and move employees to other departments. The party was held for Mr. M to celebrate his transfer to the head of Mizuho's Kashiwa branch. However, the party descended into pandemonium as M himself set new standards for how not to behave at an event being held in your name.
If a house is to be made sturdy enough to withstand a major earthquake, it must be built on a solid foundation. This metaphor is analogous to the Japanese public pension system. The system, even though it invests a large amount of money, now stands on a very shaky foundation known as the Government Pension Investment Fund (GPIF).