Photo by Irwin Wong
Allan Smith
General Counsel, AIG Companies
ACCJ Chairman
What, in your opinion, is the single most important finding of the report?
The biggest contributors to increased productivity in Japan are foreign firms and entrepreneurs. This fact will be surprising to most people, including policy leaders. Obviously, Japan’s political and government leadership should be doing as much as possible to facilitate foreign firms’ and entrepreneurs’ activities in Japan by creating incentives and removing obstacles for them.
What do you feel would be the most far-reaching and most effective single change recommended in the report that would encourage growth?
The report points out the pressing need to make Japan a more attractive market for FDI and domestic investors alike. That includes tax policy reform and harmonization of practices, regulations and standards, as well as easing rules and regulations that complicate transactions and make them more expensive.
In your opinion, what would be the result of the Japanese establishment’s failing to act on the recommendations of the report, and over what timescale?
Almost everyone agrees that Japan needs to do something bold and decisive to stop losing more decades, but not much is being done. The report’s analysis clearly defines what needs to be done. If the leadership of Japan does not take heed of these conclusions, the low-growth, hollowing out and deflation in the Japanese economy may worsen because of the demographic challenges that Japan faces.
Nicholas Benes, ACCJ Governor, Tokyo, is a man with a mission. Observing the recent changes in Japanese government, along with a receptive U.S. Embassy here in Tokyo, Benes and his ACCJ colleagues, such as Kumi Sato, Michael Alfant, Allan Smith (see sidebars) and others, recognized the opportunity for an active task force that could contribute to the discussion.
The intellectual strength of the task force is typified by experienced Japan-based business leaders like Benes. As the Representative Director of the Board Director Training Institute of Japan, an NPO that provides training to corporate management and directors in governance and related issues, Benes says, “Director training is something in the public interest–it’s not just a bunch of activists–it’s for everyone.” He is also currently seeking accreditation from the Cabinet Office for the Institute as an NPO foundation. Drawing on his 26 years of experience here in Japan (Benes has worked in the banking industry, as well as a spell as director of the rehabilitated Livedoor), he led an ACCJ Task Force several years ago devoted to producing a report on Foreign Direct Investment (FDI) which ultimately helped to change Japanese society’s perception of this issue, thus opening the door to new investments.
The ACCJ Growth Strategy Task Force, comprised of about 70 members, decided to produce another report to benefit the business community of Japan, this one titled “Charting a New Course for Growth—Recommendations for Japan’s Leaders.” What follows are key insights and observations Benes and his colleagues gleaned from the process of constructing this comprehensive report.
Journal: Obviously this was a major undertaking. What was your role in the report’s development?
Nicholas Benes: Well, I joke that I spend 80 percent of my time on this report, and the other 80 percent on my BDT Institute work. I’m busy! I was lucky to have worked with Professor Fukao from Hitotsubashi University and Professor Kwon from Nihon University. The mix of business and academia in this sort of thing is unusual. Professor Fukao in particular is a wonderful researcher, and unusually so for a Japanese professor—perhaps for any professor—he has no ego. He takes out his notebook and writes down suggestions, and he loves to get to the bottom of things. He tells me that I’m just as shitsukoi (persistent) as he is, and he means it as a compliment. For funding, we raised money from fifteen corporate sponsors from large to small companies. Given the ambitions we had, it wasn’t quite enough money, but we did manage to supplement this sponsorship.
Journal: Can you talk a little about the timing of this report?
Benes: This is a great opportunity with the DPJ in power and being open-minded, the umbilical cords to the bureaucrats being cut, all these cost-reduction programs, and a sense of change in the air. We have a great opportunity here to get heard, because there’s a huge vacuum in policy-making and for the first time there seems to be someone new who’s willing to listen to new ideas. This is our chance to position ourselves here for what we are—stakeholders here in Japan for the long term—we’re not going away, and we care about the place.
So once in a while we produce a report that isn’t 100 percent self-serving—we do something that’s good for the society as a whole. It’s also good for us as stakeholders, of course. And this was the angle I took when I pitched the idea, and it was well received.
