Exclusive outtakes from industry leaders
When you’re in charge of $1.5 trillion of assets, keeping an eye on it with all of 80 people is not so easy. So says Takahiro Kawase, President of Japan’s Government Pension Investment Fund – the world’s largest government pension fund that manages about 150 trillion yen assets, nearly the size of Italy’s entire economy. And Kawase would like some help, even as the government keeps pressuring the agency to reduce costs and staffing. “We need more people and more resources to do what we really need to do,” Kawase told the Reuters Japan Investment Summit. “When I talk about foreign pension funds … they are growing in terms of size. They are investing in systems. In Japan, the traditional thinking is that its a cost centre. But I’m trying to change that.” At a staff of about 80, that comes to about $190 billion per employee.
While Japan can do more to improve corporate governance, Tokyo Stock Exchange President Atsushi Saito said comparisons to the United States need a little context. Saito said the Federal Reserve’s decision to sell Bear Stearns off to JP Morgan Chase for a mere $2 a share in a weekend firesale was not exactly in the interest of Bear’s shareholders. “Is that respecting shareholders? You have to think about that,” Saito told the Reuters Japan Investment Summit in Tokyo. One persistent criticism of Japanese companies do not have enough outside directors on their boards. But Saito also noted that a majority of the board members at Enron – the poster-child of the U.S. corporate scandals in 2002-2003, along with WorldCom – were from outside the company. And Saito said it was a little worrying how the US Congress has been itching to take action against China with the variety of laws introduced that threaten sanctions and limits on investment. “Everything is not going according to logic.”
Takafumi Sato, commisioner of Japan’s financial regulator, makes no bones about the government’s desire for Tokyo to be the No. 1 financial centre in Asia, and he rattled off a variety of reasons why foreign investors and professionals ought to set up shop here. Among them: the world’s second largest economy, democracy and the rule of law, great restaurants, abundant household assets needing management, low crime, great public transportation, four beautiful seasons.
“Now is an excellent time for Japan to close the gap with other global markets,” Sato told the Reuters Japan Investment Summit in touting the Financial Service Agency’s “Better Market Initiative.”
Analogies abound when it comes to assessing just how far the world has come in coping with the subprime mortgage crisis originating from the United States.
In American terms, the nine innings of baseball games are often invoked. In Japan, it is often how far up the mountain you’ve climbed.
Famous for high-tech products, Japan has become synonymous among foreign investors for heavy regulation and taxes.The world’s No.2 economy is much farther down the ladder ranking when it comes to foreign investment or ownership, although trying to change that.
Dan Sloan reports.