 Gwbod yw, James Harding. I'm the director of news for the BBC. One of the joys of Davos, to my mind, is that moment when you suddenly understand something that for years you had understood and realised that you didn't. And I can't think of a subject where that's more likely to be the case transgender's or more necessary than understanding Japan, what's happening both within that country and it's place in the world. It's become a subject where people think they know they understand it and then as change, as political reform, as the global context moves, people find that they have to rethink it. We're extremely lucky this morning to have such an eminent panel of people. I appreciate that, as Mr Hasegull was just pointing out, we are a standing lesson in the ongoing work of women omics in Japan when you look at our panel. That said, I hope what we lack in diversity we will make up for in range of expertise. Let me start by introducing the panel, but before I do so I just want to give one note of caution. The one other thing about Davos is of course it brings us all together. We understand each other better, and yet there are moments where you discover that people do truly play to their stereotypes or their caricatures. I just wanted to say that I am a British journalist, and you may find that I play a little to my stereotype and caricature. If I interrupt, if I'm rude and I try and keep our panel to time, please forgive me. Let me introduce our panel. Adam Pozen, many of you will know, he's obviously well known as been a leading figure on the Monetary Policy Committee in the UK, but is a global expert on monetary policy. He's a member of the Tri-Lateral Commission and joins us this morning. We have the Chairman of the Board of Mitsubishi Corporation, Japan unto himself, Yuri Hiko Kojima, and we're extremely grateful to you for joining us. Japan, as students of the country will know, has a gift for giving its ministers more responsibilities than anyone should probably have to bear, and Shimomura-san is the Minister of Education, Culture, Sports, Science and Technology. In his spare time, he's also the Minister of the Olympics and the Paralympics in the Games of Japan. Takenaka-san, he's a Takenaka. Many of you will know he's been a very prominent figure here at the World Economic Forum for many years and is the Director of Global Security Research Institute at the Keio University. And then finally, as I alluded to, to begin with, Yasuchika Hasegawa is the Chairman and the Chief Executive of Takeda Pharmaceutical. So, a great welcome to our panel. Just to show how contrary I can be, the subject today is understanding Japan's national and global priorities as a result of the recent elections. And just to be contrary, I'm going to start with the global issues for Japan first, because if you will cast your minds back a year ago when Prime Minister Abe stood up, it was probably the most newsworthy speech of the World Economic Forum last year, the comments that he made about the relationship between China and Japan, the allusions in 2014 to 1914, and I wondered whether or not, perhaps starting with you Kojima-san, you could just give us a sense of whether you think those tensions have eased, whether or not they're simmering still, or whether or not, and whether, essentially, the worries about the China-Japan relationship are as acute today as they were a year ago. Okay, well, good morning, and thank you very much for your kind introduction. I'm wondering whether, as you speak in Japanese or English, but he speaks English, therefore. I'll try my best, but anyhow. I myself is Yorihiko Kojima of Mitsubishi Corporation, and I'm honored today to be here in such a very distinguished company to discuss Japan's priorities following the other government's victory in the recent general election. And the important thing is Prime Minister Abe's well-mixed, and everybody very much interested in it, and how to put your priority in it. I think that is very important. Well, this cabinet, Prime Minister Abe, formed after winning the great general election last year, has retained all its members except the Minister of Defence. That should ensure the continuity in policies and the continued emphasis on the economy. On December 27th, it adopted the 3.5 trillion yen economic package that includes measures to stimulate personal consumption, which had fallen due to the year consumption tax hike, and to accelerate earthquake recovery and revitalize regional areas. My biggest expectation for the other government is acceleration of its growth strategy. First, I'd like to talk about three points. First, it's necessary to continue aggressively the regulating sectors where future growth is targeted. Specifically, sectors, specifically important sectors, agricultural health care, and energy sectors where regulation has inhibited potential growth. Second point is regional revitalization. Tokyo is the focus of most economic activity which has caused regional areas to suffer from population decline and economic stagnation. Revitalization policies require that leverage local economic advantages and benefit smaller businesses. Specifically, it is necessary to open markets in Japan and abroad through production processing and the marketing of agricultural forestry and the fishery products. Furthermore, there are regional tourism resources that are not being fully utilized. Last year, more than 13 million foreign tourists visited Japan, getting them to realize there is more to Japan than simply Tokyo and Kyoto will help reach the government's goal of 3 trillion yen in annual foreign tourist spending. Third point is the promotion of free trade. It is necessary to invigorate trade and investment in order to accelerate mutual economic growth in the Pacific region, including North and South America. In that sense, the Trans-Pacific Partnership Agreement, TPP, is of the highest priority. Finally, I would like to point out the importance of balancing economic growth and the physical soundness. The postponement of the additional increase in the consumption tax raised concern in some quarters regarding the government's commitment to addressing the national debt, which led to the downgrading of Japanese government bonds. With an ageing society, it will be difficult to achieve the goal of balancing the budget in the medium term through the revenue enhancement and spending cuts alone. Reform of the entire physical and tax system, including society security, will be very necessary issues. Thank you for giving us the context in full. Taki Nakasun, can I press you on the security issues, the China issue, and as Kojima-san pointed out, there has been a change in the handling of issues around the Ministry of Defence, around the defence budget, change in the nature of the conversation around the constitution. Will you just talk a little about that? Well, thank you for raising a very interesting question, but I'm an economist and former Minister for Economic Policy. I am not the right person to answer this question exactly, but let me try. Well, it is true that Prime Minister Abe had a very strong policy toward the new kind of diplomatic policy. It is important first of all to strengthen the domestic economy, then strengthen the power of diplomacy. It is quite understandable. Well, at the same time, I quite understand that he's a realist. I worked with him together under the Coordination Government for six years or so. Well, in the past six months or so, we had a very interesting question, an interesting issue, that is the Asian infrastructure investment bank initiated by China. Well, from a viewpoint of Japan and the United States, well, this seems to be a kind of, to some extent, disturbing the current order. Well, so the political scientists have a lot of discussion. Professor Tanaka is here maybe, and from viewpoint of economists, I hear this kind of discussion. China is the global partner or the challenger to the current world order. Well, of course, the answer is not so easy, maybe, but at the same time, it is very important to recognize the geopolitical situation in East Asia and North Asia is changing a lot. In that sense, a Prime Minister has a very strong will to change something, but at the same time, as I mentioned, he's a realist. And he increased the defence budget, as you mentioned. But this is a very small increase, and this is his will to have a strong economy and a strong nation, so that we can contribute to destabilization to the stability of East Asia. In that sense, I understand, I'd like to repeat again, he's a realist. And first of all, he would like to, he would try to strengthen the domestic economy, and he will, in that sense, strengthen the relationship with the United States, so that we can contribute to the stability of East Asia. Thank you. I may turn if I can to Adam Poser now, actually, just on the TPP issue. In concrete terms, what do you expect is going to happen, Adam? Thank you, James. I think I need to bridge it just slightly to the political context. So in Japan's case, this is obviously part of trying to make itself not only closer allied with the U.S., but helping those countries around the region that it sees as potential allies is a little strong, but neighbors who can help keep China within check. So Taiwan is traditional, Thailand, but also Vietnam, Indonesia, and others. And of course, in the U.S. case, this is an attempt to bring together both economics and security, as USTR, Froman has very clearly said, although that's partly, that's how you sell it to a U.S. audience, as you say, it's for foreign policy and security reasons, or you sell it to Congress that way. So realistically, it's important to get the U.S.-Japan bilateral right because Ambassador Froman and his counterpart in Japan, Minister Amari, have set up the dominoes. Basically, the thing that unlocks TPP following on Mr Kojima is market access to Japan for agriculture and related products. That's the big gain. It's the big gain for Japan. I've done, we've done some estimates at the Peterson Institute, that the average Japanese family could gain additional $1,500 a year if there was sufficient liberalization in the Japanese agriculture market. So the huge gains to TPP are for Japanese-owned people. But then if Japan and the U.S. can agree on those, the dominoes fall because all these other lesser developed countries involved say, oh gee, okay, you're going to give me that goodie of access. I'm willing to sign up for stronger intellectual property right protections, stronger investor protections, all these things Japan and the U.S. want. And then you turn back around and you go to Australia and Canada. Well, this is what, this is the deal, you're in it or you're out. And so it really comes down to Japan and the U.S. getting past this impasse on agriculture. And the, in Japan, they keep saying, the diet members of the cabinet keep saying, well, you know, you can't force us to zero, it's embarrassing, the LDP party has said there are certain crops and things that we're not going to touch. And the U.S. negotiators keep saying, if you don't give us enough on agriculture, we can't go to Congress or we're going to have to ask for a lot more on auto parts and you don't really want to go there. I am hopeful that in the next couple months a deal will be reached because they really are now down to negotiating about actual tariff levels on pork and beef, which is a crazy thing for the most important military alliance in the Pacific to be waiting on. Assuming we get that done, the U.S. doesn't push Japan to zero and Japan does show a path to significantly lower tariffs there, leaving rice out of it. We could have a TPP proposal by March-April. The President Obama made it clear in his State of the Union address he wants to ask for TPA, note all the acronyms, what used to be called FASTRAC. And FASTRAC only makes sense if they have a deal to present to Congress because Congress doesn't give it in the abstract and the deal has to be TPP because there's no other deals on the table than anywhere. So it's potentially big. Listening to you, I'm struck by the frequency with which in the World Economic Forum you end up having a conversation about the interests of farmers. Yes, absolutely. Shimon Morison, we'll come in a moment to the domestic agenda. What Mr Pozen and Mr Kojima refer to in TPP is if you like quite a traditional Japanese foreign policy position, cementing a relationship with the United States. Is the political position of the Liberal Democratic Party, is the LDP moving as regards the Constitution, defence and posture towards China? Thank you very much. If I may, I should like to refer to Japan-China relationship. At the outset, as you referred to, last year Prime Minister during his stay in Davos made some reference and that caused some commotions. That's what it's been reported, but actually the interpreter's interpretation was the cause of that issue. And Prime Minister Abe referred to the current China-Japanese relationship similar to UK and German relationship during World War I. I was listening to the conversation in Japanese directly and it did not involve any problematic reference, but the general impression is that Abe's cabinet is becoming a right wing. And there may be some real issues involving Senkaku Islands, but as Professor Takenaka mentioned, Abe's cabinet and Prime Minister Abe is very realistic and taking the realistic approach. During the Beijing APEC summit after two years and six months, there has been a summit to talk between China and Japan. And we offer the basic relationship between Japan and China that is mutually beneficial relationship based on common strategic interest. And based on that, in various areas we will accumulate dialogue and cooperation so that we can promote and develop a Japan-China relationship from the overall point of view. Towards the end of November last year, I organized a Japan-China-Korea cultural ministers meeting in Yokohama. So in this way, there is a mutual agreement to promote a bilateral relationship in a solid way, including the grass-root relationship. But on the other hand, even after the APEC meeting, the Chinese public vessels continue to infringe and invade the Japanese EEZ surrounding the Senkaku Islands. And Japan will take a cool, headed and solid response to Chinese act of violence in this way. Thank you for addressing that issue head on. Has it gone on finally on Japan and the foreign policy issues? How do you see this and particularly how do you look from a business perspective at the issues in the region? First of all, Japan-China and Korea started a trilateral free trade agreement discussion several years ago. However, progress has been slow. In the meantime, China and Korea claim that they have reached agreement before the end of last year. But primarily, in my opinion, due to the accelerated progress of TPP, particularly between the United States and Japan, two nations consist of more than 80% of the GDP in the 12 nations participating in the TPP discussion, made them a little bit nervous because whenever Xi Jinping and President Obama get together behind the scenes, he always ask the progress of the TPP. Even though China is not prepared to join the TPP because of the many, many state-owned enterprises issues have not been solved. So, with that in mind, finally I learned that China, even though has reached a bilateral agreement with Korea, they are willing to resume the trilateral discussion including Japan, China and Korea, which is a good sign. So, I think we need to push full-code press in terms of the free trade agreement, particularly TPP, because TPP is the most time constraint. Within a few months, if we don't reach agreement, we may run out of time because it may take another six months to fine-tune the sentences and lines and sentences. By that time, the next year's presidential election is near to start, so we better get this thing done as quickly as possible. And in that respect, both Japan and the United States are on the same page. So, I'm very much encouraged and even the TPP progress is going to impact positively on the FTA negotiation with the EU as well. When it comes to the security concerns in North Asia increasing due to the recent incidents that could easily escalate into a crisis that nobody wants, such as several incidents, Chinese air force jet fighters flying in dangerously close proximity to Japan's self-defense air force jet fighters, Chinese coast guard vessels fixing their weapons, radars on Japan's coast guard vessels, Chinese coast guard vessels, and even fishing vessels making frequent incursion into Japanese territorial water around Senkaku Island. China unilaterally set new air defense identification zones, some of which overlaps with Japan's existing ADIs IZ. Japan and China have finally agreed, but Japan and China finally agreed to start talks on the crisis prevention following Xi Jinping and Prime Minister Abe's meeting at the APEC summit in Beijing last October, which is a good thing. But even though it was agreed upon until last September, last December, nothing has happened. China was just watching the sea. Prime Minister Abe never visited Yuskynishrain again. But it didn't happen so now, starting from this year, this discussion is going to start, which is absolutely necessary for the security of this part of the world. So, good signs are showing here and there, but still we need to be very, very careful and cautious about the progress and not to destroy and not to break this kind of, you know, fragile release starting the negotiation discussion. OK, good. Well, let's just take stock there for a moment on the Japan and its global priorities. You know, there are not enough grounds for optimism in the world these days, but at least the last 15 minutes I'd say on foreign policy terms would make you feel rather optimistic. It's clearly 2015 is the year for TPP. You would get the impression from this conversation that that's more likely to happen than not, that we need to be subtle and sophisticated in understanding the nature of the engagement between China and Japan, but it certainly doesn't feel too alarmist. But I guess the crunch comes now, going back to Takenaka-sad's phrase, a strong economy being linked to a strong nation. How's Japan doing on the strong economy question? And Prime Minister Abe's way of describing the economic issues, those three arrows, actually I think if each of our panellists say pretty easy way of addressing the Japanese economic question, are the return on the returns on fiscal stimulus diminishing is the capacity for monetary easing to make a significant difference to what's happening in the Japanese economy, particularly given what the Bank of Japan said yesterday about the inflation target. Is that struggling too? And how much is structural reform something that people pay lip service to, but really struggle to deliver, particularly outside Tokyo? Can I start actually with you, Adam Pozen, and give, if you like, a Tory result of the issues on the Japanese economy, and then I'll come through the panel? Well, thank you. I mean, I in a sense represent diversity, I guess. Let me tackle this in reverse order. James is right to make a big deal out of Prime Minister Abe's speech here last year, which was groundbreaking. And on the economic side as well as on the 1914 analogy, many people remember that he used the analogy or the image of Abe and his cabinet would be the drill bit, the diamond hard drill bit that would crush through interests. And the answer is, in reality, he's crushed through some and not others. And you always worry about the glass half empty, half full nonsense, and I don't want to leave you there. But the fact is, in light of what you said, James, at the start, there's a tendency to view either you're a supporter of Abe and you say everything's wonderful, or you're a skeptic on Japan and you say nothing's ever changed. And the answer is no, actually a lot has changed, but not enough. So when we look at structural reform, you know, I think there are people in this room who've written about this as well as I in much greater detail. But you have to acknowledge that there's been a huge surge in female labour force participation in Japan in the last two years. And people on the outside of Japan have been as well as some brave people inside Japan have been saying for years the two biggest things you could do for the Japanese economy is either start making better use of the well educated women you have, or start having immigration. You can be racist or sexist, you can't be both. So what remains is they're partially sexist, but at least there's progress. And so we have roughly 600,000 women over trend who've joined the labour force or become active in the labour force over the last two years. And that's a huge number. That's more than one percent of the labour force. Remember when we talk about participation problems in the US, we're talking about a couple percent. This is a historic move. And there's still room to expand it, not just by reducing sexism, but particularly by changing the tax code which penalizes two income families. But the bottom line is this is enough to offset demographic decline in the labour force, I mean I defer to HESO, but roughly for five, six years. This is a very big number. And another thing is people say well a lot of it's part time or informal work and that's true, but we know from the Nordics and from France that if you want to keep women in the labour force it's very important to have flexible work arrangements. So you shouldn't poo poo it on that grounds. But that leads to the monetary issue and as you mentioned the trouble the Bank of Japan seems to be having of meeting its two percent inflation target. One of the things that gets into technical arcana, but when you're a central bank you can choose to target some version of what we call core inflation which is supposed to be the underlying trend or headline. The advantage of headline is everybody understands it and you're not seeing us making excuses. The disadvantage of headline is it goes up and down all the time. And the headline inflation rate in Japan which is basically what the Japanese Bank of Japan targets, leave aside food, has been going down in part because you've added 600,000 people to the workforce and you're making more flexible the workforce in various ways. And women do get paid less than men especially if they're part time. And so you have this transitional thing where there's downward pressure on wages. This is good for Japan's growth ultimately, but just as with Germany in 2003, 4, 5 after labour market reforms you saw a disinflationary trend. And the Bank of Japan there are other factors like the energy shock. The Bank of Japan if I was sitting there as I used to at Bank of England I'd be saying look past that. Stick to your guns and say ok that's temporary. We're going to look past that. But it's hard because Governor Corota promised to get to two. Sorry I'm going on too long, just very quick. In the context when all of us I'm very glad to see such a full room here observing on Japan at the same time the ECB is fiddling. It still remains that the Bank of Japan's new approach is far superior to what the ECB is about to announce because they're not defining their success by the amount bought in a certain period of time. They're defining their success by getting to the inflation goal and they keep saying they will readjust what they need to do in order to get to the inflation goal and that's right. The third arrow, fiscal, that's where I think the biggest disappointment lies in addition to the fact that there are a lot of other structural reforms like agriculture that haven't yet been pursued. I mean the women's stuff is more important than anything else but there's still a lot of other stuff to pursue. On taxes, Hazel and I have debated this, others can speak from the business community in Japan. I'll just say that it's true that the tax hike and the consumption tax was more harmful to the economy for longer than people expected. Nonetheless, if you don't start raising taxes now you're just going to have to raise more later. And so I think it is unfortunate that the government postponed the tax increase. Thank you. Tachel Angustin, can I turn to you and will you just pick up particularly on the point around household incomes and whether or not we're likely to see any movement in that because for some people it seems a mystery. Well thank you. Adam gave us a very comprehensive explanation of what's happening in the Japanese economy and economic policy. You raised the question of household income. Yes, because of the tax hike last year the household consumption declined a lot and the situation where the so-called deflation in mind is existing it was very risky to raise the consumption tax rate. But anyway, this was decided by the former government, not other government, so it has nothing to do with the economics, that's all right. Well, maybe this should be described by Minister Shimomura. But anyway, in the class of economics 101 we quite often learn improving the total is different from improving all. To increase GDP means to improve the total economy, but this doesn't necessarily mean that all people are well improved. It's happening now in Japan, but the main purpose of economics is to improve the total. Well, before economics started the total GDP had been declining, minus 2%, and economics changed to positive 2% growth. This is a very important step. Very unfortunately, consumption tax hike stopped that trend, but anyway the economics is going to restart. But under such circumstances anyway, first of all it is very important to improve the total and strengthen the competitiveness of productivity, as was mentioned by Adam, and of course there are still many things to do. And many empirical studies say, well, there's some time lag between the main economic indicator and the labor indicator. So I think sooner or later, well, the wage will also start increase. Actually business leaders like Kojima-san and Segar-san will understand that. So, well, important point is anyway to show the very strong attitude for the reform. Adam also mentioned the policy of Bank of Japan. Bank of Japan, Mr Kurota changed the expectation of the people, expectation of the market. So it is now very important to give another expectation to the people, to the market through very strong attitude of the reform of the government. Now we are in that kind of process. For the details of reform policy, maybe, you hear Adam mentioned the labor market reform. Yes, this is important and also similar issues of medical care, et cetera, et cetera. But one important message is in order to make a breakthrough for all better regulations, we have better regulations. The Prime Minister decided to establish the special economic zone, strategic special economic zone. Its system already had started. And this special economic zone, they're completely different from labor. A much more flex labor market could be created. And there's kind of a degradation will be lifted. So now we are in the very strong start point. Very fortunately, our Prime Minister got a very grand-striped victory in the last election, obtaining 2,000 majority of the diet. It is indicating now that the Prime Minister has a very strong and stable political base. The problem is how to make use of this political capital and how to allocate this political capital to each policy. Thank you. Hasigawasun, I'll turn to you now. And again, just going back to the three arrows, it's still people are trying to understand how effective they're being. On the structural reform one, I'd also ask you just to talk a little bit about how you see structural reform in the healthcare industry, if you see it really happening. Well, general understanding of the first hour and the second hour are monetary easing. And also the decent side of the stimulus package worked out very well. And the government is prepared to do additional stimulus package if it's necessary, just like now. And the ultimate goal of Abenomics, in my opinion, is to create the virtual cycle of the economy. First, corporate earning growth, increase in the capital investment, wage increase and unemployment decrease, tax revenue increase, sustainable goals and the financial consolidations. Those virtual cycles need to be created. That's the ultimate goal. To make that happen, the first administration needs to show their will to executing the bedlock regulation breakthrough. It is called structural reforms. Structural reform in this case compared to the previous administration has done much better job, but still those are not deep enough and strong enough and fast enough. That is a problem because I was very much interestingly find after coming to Davos this year, even European people are talking about structural reform. And particularly if they prefer countries in the EU community, they haven't done deep enough and wide enough structural reforms. But if you apply this to the Japan's case, agriculture reform, overall design is already done pretty well. So it's a matter of how to register that in this coming regularization. And the medical reform and the healthcare reform, not as good as agriculture, but still waiting for the registration. But when it comes to the labor workforce liberalization, it was not good enough. Because of the strong, against from the best interested group, you name it. So we have a long way to go. Therefore, even after winning the line stride victory in the December election, which gave our administration another four years, golden time to prioritize how to implement issues to tackle on one after another. But still those bedrock are not cultivated enough and drilled enough. That is the next test. We are carefully watching, but not only watching by standard, but also we are working closely with government to encourage and help government to tackle on those issues. Otherwise, just like Germany did in the early 2000s, we cannot come back a strong man like Germany did in the EU in Japan. That's the bottom line in my opinion. Kojima san, can I turn to you for your economic analysis? But in particular, I wanted you to elaborate on the point about the regions in Japan. I was struck by your comment about tourists needing to go beyond Tokyo and Kyoto. I have to say, when I studied Japanese, they sent me to Kushiro in Hokkaido. That's a nice place. It's a lovely place. Everyone should go there. It's also, by the way, the foggiest city in Japan. I think they thought that would be good for a Londoner. But it's obviously becoming a bigger issue this, the disparity between the regions and the big cities in Japan. In your economic analysis, would you just elaborate on that point? I am a member of the Keidanren. I went to the Hokkaido Keidanren, Hokuriku Keidanren, and the Chubu Keidanren, Shikoku Keidanren, and also Kyushu. I can communicate with the local people, then everybody expecting tourism and agriculture. Particularly in Hokkaido area, tourism and tourists is now coming a lot. This is very important. Hokkaido, the agriculture's resource quality is very, very good and the temperature is getting hotter. Therefore, much more good products will be getting in the Hokkaido area. The other area is the same. Therefore, there are so many factors to encourage the local and regional economy. Under such circumstances, local by local, they try to find out what is the best way. Under such circumstances, you talk about the relationship between China and Japan. I like to tell something about that. Quite recently, I visited Shanghai and Tenshin. You may know... Our company has the biggest office outside of Japan, the New York office. But now the biggest office of Mitsubishi Cooperation is Shanghai office. In China, we have more than 14 offices. They are working very hard. Under such circumstances, new customers are now approaching to us from China. A very reliable business group. When I went to Shanghai, they invited me for dinner at Shanghai Port. They arranged a very big cruise ship for a very big restaurant there. This is the number one chef in China who served this. Also the best shokoshu. That was very good. We were cruising the port to discuss about the new business. As far as the business relationship is concerned, we don't worry so much about it. Under such circumstances, even Xi Jinping tried to open the door. Therefore, I don't worry so much about it. This is also very important. In terms of the TPP, how to protect the agriculture industry is not so good. How to encourage agricultural business is very important for the TPP. If you try to protect the TPP and agriculture, agricultural people who are involved in the agriculture industry in Japan are almost 70 years old. Younger generation feels this is the job for elderly people. That's the problem. The agricultural industry should be the younger generation's business for future. This is the same in Australia and Canada. The agricultural industry people have to graduate university and they have to know the IT. This is the agricultural people throughout the world. Japanese government should strongly emphasise this point. Let them go to the Australia. A very big agricultural zone controlled by the GPS. Most of the agricultural equipment is robotics. This is related to the delivery. The grand terminal is a computer room. If this is a message from the government to the younger generation, they will try to develop more good business in the agricultural industry. Thank you very much. I'm going to turn over in a moment to questions and comments. One of the great things of sessions like this is that if you're a minister of government, everyone comments on the work you're doing and you have to sit politely and listen. I wanted to give Shimomura-san a chance for the Abe administration to account for itself. Also, if you will, Shimomura-san, just to pick up on a point that Mr Takenaka made about the political culture of Japan, you've seen a strong commitment, a big commitment on fiscal stimulus, strong talk on structural reform and from the Bank of Japan too, moments that have really taken the world by surprise. It seems as though there's a more dynamic culture in Japanese politics and yet at the same time there's a higher level of public disengagement given the low turnout at the elections in December. So, will you just give us a political flavour too to what's happening in the Japanese economy? Thank you very much for that. Let me start out by saying the reactivation of the local areas. Starting in September of last year, number two of the Liberal Democratic Party, Mr Ishiba, the Secretary General, is now in charge of the reactivation of the local areas. He's in charge, minister in charge of that. So, our cabinet is committed to reactivating not just Tokyo region, but the rest of the country. And there will be many new laws put in place about the labour and there are about 90 bureaucrats. From my ministry we have sent 15 bureaucrats for that purpose, education, culture, sports, science and technology. That comes under my purview. And these are all areas that will be built in the future of Japan and they will become the future industries of Japan. For that reason there has been no point relations with the universities, the schools. We need to get in touch with them so that we will choose the industry that is suited to that region and develop people who would be there. So that we would like to have a good relationship with the local areas to grow the industry. We talked about the tourism. We had 30 million people come to Japan last year. The first arrow, that was the... ...both monetary policy and fiscal policy. And in the December election, the biggest priority is economic growth, reverse of economy. It's going to take time, but there's nothing else. And the government has the trust of the people through that election. And we will continue with the two-thirds majority of the House. We will continue the policies taken so far. I believe for the future, in 2020, the Olympic Games and Paralympic Games should be a very important chance for culture and arts. We should have 20 million people visit us on 2020. 2030, we hope that we will have 30 million foreigners come to Japan, not just Tokyo, not just Tokyo. Of course, Hokkaido and other regions is because there are treasures that are sleeping now. So this is a big scheme of Japan's heritage. And we will involve the culture and the arts so that the people around the world will think, oh, I want to get to see Japan. So in 2016, we will have Olympic Games, Paralympics in Rio de Janeiro. And I would be talking with Dr Schwab. We will hopefully have a world forum limited to culture and sports culture. And I think that could contribute to the reactivation of Japan. So that's what I was thinking of, political culture. Unlike other countries, we can dissolve the House when the Cabinet is the strongest. Other countries have got to wait until your term ends. But in Japan, we can dissolve the House and we can continue to win the trust of the people by dissolving the House, having another election. So with the election in December, we will now have four years and people have supported that. We should accelerate that. Democracy takes time. Mr Haseb Gawa has just said. Structural reform deregulation just taking too much time, too slow. We're not a dictatorship. So the government can't do what it wants to do. Why? We need to wait for consensus. It may take time, but it's going to be best to reactivate Japan. The agricultural reform deregulation of labour market, medical field, of course. But this year, we would start by protecting the agricultural area. But Mr Kojima was talking about the Australian case. We would like the Japanese farmers, the Japanese agricultural sector to export beautiful Japanese produce because some of them are really very good. And it just says that Abe has the trust of the people. A stable government will be able to do this and much more. So the world can look forward to Japan. James. I will, please forgive me one second now because I want to make sure we get some questions and comments and there are going to be a few. To sum up that, just, I know it's a lot. A lot of territory very quickly. My quick summary would be that the drill bit is probably a little blunter than it was in fiscal stimulus. The wall has got a little harder when it comes to monetary policy and structural reform has punched a few holes, but the wall is still there. So, questions. I'm going to go to you and then to you, Cathy. Cwbio. Thank you. My name is Lynn Cwbio. I'm a young global leader from Japan. Being a young or relatively young female living in Japan, I just wanted to touch upon three things. There's gender parity and entrepreneurship and education and provide some specific examples of why I believe that Japan is changing. So on gender disparity, I know Cathy is going to give you a macro view of this issue, and I'm on a micro level. I serve on one of the communities under Shimomura-san, and I have two little children, one of five, and live in Nagano prefecture, which is about half an hour away from Tokyo, and he allowed me to serve his community through Skype while he himself is present in the meeting room. So that's how Japan is changing. On entrepreneurship, I graduated from a Tokyo University in 1998. You can tell my age. Don't calculate. A majority of my best friends are entrepreneurs, including myself. So that, I guess, tells you something. The third one is on education. Our school is an international school where 70% of our student body comes from all over the world. 95% of our faculty are non-Japanese. And the language of instruction is English. And the Ministry of Education has accredited our school to be a Japanese school, and the minister very kind of generously came to our opening ceremony last summer. And I think it's really a horde of that a school like ours is accredited by the Minister of Education. So I think that really gives you, as James said at the beginning, you think you understand something about Japan, but actually you didn't, or maybe you did. So that's my two cents. Thank you. Of course, thank you very much. Cathy, do you want to... You should come here, right? Over here. So I'm going to take a few questions and comments at a time and then come back to the panel. Two quick questions. First, a topic that was not... I'm from Goldman Sachs, Tokyo, by the way, but first a topic that I'm surprised nobody mentioned that I think in the third era has seen radical speed of change is corporate governance. I'm interested in Hasegawa-san and Kojima-san's business perspective. We had a stewardship code introduced actually from the UK last year for asset managers. A new corporate governance code is going to be introduced this coming June. That's actually going to force Japanese companies to explain why they own cross-shareholdings. Isn't that kind of radical? So any comments there? And secondly for Shimamura Daijin, on the gender initiatives, I agree completely with Adam Pozen that there has been significant progress. However, we do need to put more pressure on society. And I know there's a... or some kind of legislation pending that will actually force Japanese companies to establish diversity targets and action plans to reach those goals. So just interested, is that going to pass or do I have to tell my clients that, you know, don't be too hopeful? Very good, and Peter. It would be interesting to hear the panel... Peter Woldowski, editor-in-chief from Sweden, Dawgans Nielder. It would be interesting to hear the panel say something about the European economic situation compared to Japan. What can Europe learn from Japan? Very good. Are there any other comments or questions? Yes, sir, at the back. Thank you. Eric Mendes from Eaton Park in New York for Shimamura-san. Integrated resort spill. Why that's taken so long? What the prospects are? And how important that is for the Olympics? Hmm, okay. Very good. Let's have a go at a few of those questions. Could ask the panel to keep their answers very brief as we have just about five minutes left. Frankly, Shimamura-san, I think you get the bulk of the work here. Let's take the last question first, the question about the Olympics and the integrated resort legislation, but also to Cathy's point about the changes in the targets of diversity. First, about the gender equality and the promotion of women's participation bill. In the ordinary diet session this year, it will be passed. I will make sure it will pass. And also, and the gender issue and the women's activity promotion including the gender equality for the government as a whole, we will make the no child care facility waiting line. The 400,000 children will be accommodated. And also, after school, when mothers are still working, the children cannot go back home and stay in a locked apartment. So we have a after school child care plan, the government take initiative to introduce a scheme for each school so that from child rearing point of view, women feel assured of working. And about IR, I am a strong promoter in that. And globally, the casino is approved as a facility. But in Japan, there is still sense of position about gambling and also gambling dependency or addiction. And mass media is very against it. In Japan, we have a pinball game, Pachinko, anyone can go and visit Pachinko Parla. But the casino is the restricted area and you need a passport going in. But that restriction is not fully understood in Japan. So in the course of this year, by adopting this, passing this bill this year, so that by Paralympics in 2020, it can become a major strong tool in inviting more foreign tourists. Thank you. This is going to be a difficult task. Corporate government's reform, Kojima-san, can you just give us one concrete example of how things will change? Maybe my question, I've got a question about the third arrow expansion. Actually, unfortunately, we're not going to have time realistically because I'd just like to get an answer. Hazegawa-san, do you want to try first? I want to get one concrete example and I'll come back to Kojima-san just if we've got time. It's just a matter of time. Once government decided to enforce and mandate corporations to have multiple non-executive board members, it will happen. So it's just a matter of time. It's really a shame until we get that kind of mandate. No individual initiative took place. By the same token, the corporate stewardship already more than 106 or 7 or 10 institutional investors signed up for the corporate stewardship. So it's going to happen again. So both will have a very, very short period of time overwhelming speed and the magnitude. Kojima-san, do you agree just on corporate governments about the nature of the change? Corporate governance is a very, very important issue. And frankly speaking, our company has more than 600 subsidiary companies. And subsidiary companies, how to make corporate governance completely. Now we are educating the people and also we select so many outside directors and also try to communicate with them. Sometimes it's very hard for all directors to understand what we are doing and say maybe you should know the trading company. Most of the profit was trading. But now business model is changing. Now our business model is the same. 70% to 80% of the profit coming from the investment. And we are now told that you are a business model changing from the trading to the investment banker. But we invest not only money but also human resources. Human resources, education, or the management of human resources is very, very important, particularly from now. Thank you very much. Adam Pose and I interrupted you. Did you have anything urgent to say? Just quickly. The Yabe administration has gotten a bit of a good ride on this panel including for me and I think it's important to do a corrective. Well, Cathy Matsui is right about the intent on corporate governance reform. Nothing has really changed. And we know from the U.S. and the U.K. you can have the right corporate governance on paper and it still doesn't matter. So I wouldn't put too much on that. But second and more importantly, I very much contest what the minister said and what Erizo said. Originally the special economic zones were supposed to be a means of reducing health costs and improving labour markets and were supposed to take part of Osaka and Tokyo. Instead they got hijacked by the backbenchers of the LDP to be another handout to elderly in the rural areas. So if you're looking for your test case that the politics in Japan have gone wrong it's the special economic zones. Adam Pose and thank you very much. On that needling note, a good one to end on, I wanted to thank you all for coming here this morning and for the interest in what's happening in Japan, the region. But please join me in thanking our panel. Thank you very much indeed. Thank you.