TOKYO (AFX-ASIA) - Prime Minister Junichiro Koizumi said he will set guidelines for banks and companies to discuss restructuring debtor-creditor relations as part of the government's target to resolve the bad-loan issue in two to three years.
"I will create a framework to promote write-offs of banks' bad loans by setting guidelines for a mechanism to resolve the issue," Koizumi said in a prepared policy speech for the lower house of parliament.
He added that he will immediately implement a planned economic stimulus package, worked out by former prime minister Yoshiro Mori, which includes setting up a government-linked body to buy banks' cross-shareholdings.
"The planned limits on banks' cross-shareholdings and the stock-buying body should be operated in a way to harmonise the stability of the banking system and the financial market mechanism," he said.
Koizumi stressed the need to create a competitive economy. "I will strive to create new industries and jobs," he said. "I will firstly strengthen the function of the Fair Trade Commission to enhance the government's policy of increasing competitiveness, as well as the government's Council for Regulatory Reform," he said.
"To revitalise the stockmarket, I will implement sweeping reforms, including introducing, over a short period, tax relief to help promote participation of individual investors in the market," he said. "To promote transactions in land assets and revive large cities, I will set up a large-city rejuvenation headquarters as soon as possible," he added.
Koizumi said he will take a two-step approach to fiscal reform. "Firstly I will set a ceiling of 30 trln yen for the issuance of government bonds for the year to March 2003, secondly I will not allow new funds for extra government spending, excluding bond refunding," or paying down debt, he said.
"I will work out by June a basic policy for economic and fiscal management, as well as structural reforms of the Japanese economy and society, through the government's Council on Economic and Fiscal Policy," Koizumi said.
"I will overhaul existing national government projects, cutting unnecessary projects, and shifting them to the private sector and local governments," he said, adding that funds for government-linked special corporations will be cut.
"The government will cut spending on special corporations substantially," he said.
On his long-standing plan to privatise the Post Office, Koizumi said: "I will accept the planned takeover of the current postal services, including postal savings and insurance, by a newly created agency in 2003."
He added: "I will set out a concrete policy on how to privatise postal services by creating a broad-based policy conference as soon as possible to study the possibility of privatisation."
On welfare policy, he said: "I will implement policies on the national pension, elderly care and medical insurance systems, taking into account a balance between benefits and the burden of cost." Koizumi reiterated that he will implement the so-called "e-Japan" project, proposed by the ruling Liberal Democratic Party, to promote high-technology.
"To implement the project, I will set targets for a mid-term programme, called IT 2002, and I promise to invest more money in science and technology development," he said.