In sharp contrast to the go-go years of the late 1980s, Japanese insurance companies big and small have suffered declining fortunes during the final decade of the 20th century. The failure of two midsized insurers and the reorganization of others in distress underscore the industry's predicament. While many of its problems can be traced to the prolonged recession, outdated regulations, practices and attitudes also are to blame.
The government started examining ways to modernize the regulatory environment during the "bubble economy" period of the late 1980s. New legislation, the first overhaul of the Insurance Business Law in half a century, went into effect in April 1996. Subsequently, Tokyo inked an insurance market access accord with the United States that brought about further change as well as a global financial services pact. At roughly the same time, Tokyo began to implement the Big Bang program of financial market reform. It, too, is reshaping the insurance industry both directly and indirectly. Japanese insurers also will have to adopt new business models quickly and aggressively to stay competitive in the Internet Age.
YEN GAINS AGAINST DOLLAR DESPITE REPEATED INTERVENTIONS BY TOKYO by Douglas Ostrom
Where is Mr. Yen now that we need him? In late July, some currency market traders could have been wishing for assistance from Eisuke Sakakibara, vice Finance minister for international affairs until earlier in the month. Mr. Sakakibara was widely believed to exercise unique influence over currency markets. In his absence, the yen edged upward, temporarily hitting ¥115.49=$1.00 July 26 in New York, its highest level since mid-February. While Japanese officials have been reluctant to specify an ideal figure for the yen, or even a range, they are thought to favor an exchange rate of around ¥120=$1.00 on the grounds that movement toward ¥100=$1.00 would undermine exports, encourage imports and crush an economic recovery that many regard as extremely fragile at best.
TOKYO BACKS CONTROVERSIAL INDUSTRY REVIVAL BILLS AND TAX ACTIONS by Jon Choy
Believing that they have taken sufficient steps to get the economy moving, Prime Minister Keizo Obuchi, his cabinet and the ruling Liberal Democratic Party have turned their attention to rebuilding the international competitiveness of Japanese industry and restoring the government's fiscal balance. The cabinet sent to the Diet July 21 an outline of actions to help firms adjust to the changing economic environment by shedding excess production capacity, improving the efficiency of both labor and capital, boosting support for small and midsized companies and encouraging investment in and utilization of research and development.
CHINA-TAIWAN ROW OVERSHADOWS ASEAN REGIONAL FORUM MEETING by Marc Castellano
Tensions between the People's Republic of China and Taiwan took center stage at the July 25-26 meeting in Singapore of the Association of Southeast Asian Nations Regional Forum, the most important security gathering for the countries of the Asian Pacific region. Members of Asean, which groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar (formerly Burma), the Philippines, Singapore, Thailand and Vietnam, meet annually with their so-called dialogue partners Australia, Canada, China, the European Union, India, Japan, Mongolia (new this year), New Zealand, Russia, South Korea and the United States. Issues topping the agenda for this year's Asean and follow-on ARF sessions included the China-Taiwan row, territorial disputes over the Spratly Islands, North Korea's possible test missile launch and the vitality of Asean itself.
Stiff antidumping duties have priced Japanese-made carbon hot-rolled steel products out of the American market (see JEI Report No. 23B, June 18, 1999). Carbon cut-to-length steel plate products could be the next casualty of the U.S. steel industry's campaign to punish mills in Japan as well as elsewhere for the problems they supposedly caused by pumping up shipments last year of a wide range of unfairly priced products.