The Present Condition of Industrial Revitalization Corporation
February 9th,2005
President of the Industrial Revitalization Organization
Mr. Atsushi Saito
Our organization was established in April 2003 for the purpose of unifying the recovery of finance and industry. The economic bubble burst in 1995, but Japan kept using the traditional Keynesian macro-economic approach to salvage our financial organizations. However, it became apparent that just by reducing the bank’s non-performing loans and investing in public works would not correct the situation and we were faced with new conditions which caused our organization to be born.
In concrete terms, not only were financial countermeasures applied, but it was necessary for a complete overhaul of the business model concerned. Furthermore, there was an extreme shortage of persons with the skill and know-how to revitalize the corporation in question.
A characteristic of our organization is that it is as far as possible staffed by civilian personnel. Our staff includes lawyers, certified public accountants, consultants, etc. who have professional skills. As a government organization we are the first to resemble a private corporation. The highest decision making authority is our Board of Directors, and the Industrial Revitalization Committee for revitalization projects.
We are guaranteed independence from government and politicians. The law authorizing our creation stipulates that government financial institutions must cooperate with us and the canceling of the large debts of Mitsui Mining, and Kyusyu Sanko companies would not have been possible on a private basis.
We have no government officials or persons with such careers on our Board or committees, nor do we have scholar critics. We are comprised of persons all with a career in their private professions.
Old traditions die hard and it is difficult to change old ways. However, as Japan’s industry becomes involved internationally, we will lose out to a rational pursuance of capital profits, will force our people to make unnecessary sacrifices.
How did this come about? Persons have pointed out the irregularity of the overwhelming amount of indirect financing, and the ‘keiretsu’ forming by the mega banks. This has presented disclosure, and the scientific analysis of risk return.
The significance of government enterprises is to supplement and cover the failures of the market economy. In doing this, the efficiency of capital must be abandoned.
It was believed widely that the success of Japan’s post war economy was due to governmental guidance, and this led to official intervention in economic affaires when deflation set in, causing a delay in thorough economic recovery.
At present, we are using one trillion yen to support 41 projects. Although there are critics who say that we have not been able to use the 10 trillion yen allocated to us, I believe our records shows how wisely we have spent our funds.