The WSJ reports,"Japanese Prime Minister Shinzo Abe unveiled an ambitious package of economic reforms aimed at revitalizing corporate earnings power and setting in motion structural changes to try to put the nation back on a clear growth path.
It was the second attempt by the popular leader to convince domestic and foreign investors that he has the will, ideas and political clout to carry out painful changes so Japan can withstand global competition and demographic challenges.
"We will break through whatever barriers there are to unlock the potential that the Japanese economy has," Mr. Abe said at a news conference. "Implementation of the growth strategy is the key to success."
Investors have long waited for Mr. Abe to come up with a convincing strategy for economic revitalization as the so-called third arrow of his economic policy. Such a package, they have argued, is needed to solidify the growth generated by the first two arrows Mr. Abe implemented after taking power a year and a half ago: massive monetary easing and public-works spending.
While last year's growth strategy caused disappointment, especially among foreign investors, and sparked sharp falls in Tokyo shares, the latest batch looks set to receive a warmer welcome.
This time around, government officials note that domestic stock prices have remained on a rising trend after the announcement of the draft package last week, even as some economists complained that it is a grab bag of myriad items short on specific deadlines or strategies for implementation.
The package calls for cutting the corporate-tax rate and knocking down long-standing regulations in areas such as employment rules, agriculture and health care. Mr. Abe also emphasized his plan would address the problems stemming from a shrinking working-age population by encouraging women to enter the workforce and bringing in more foreign workers.
"The announced package in general exceeds market expectations, and we like it," said Tomo Kinoshita, chief economist at Nomura Securities.
Among the pillars of the latest package is a plan to cut the nation's 35.64% corporate-tax rate to below 30% over the next few years. Other changes aim to allow for more-flexible work patterns, give patients more health-care treatment options, and make the farming industry more productive.
Some economists and analysts say they see merit in a plan that requires companies to adhere to a corporate governance code and better reward shareholders, which could help push up Japan's low return on equity—a longtime source of frustration for foreign investors in Japanese stocks.
"The revised growth strategy puts a strong emphasis on propping up Japan's earning power—something we didn't expect much," said Naoki Kamiyama, an equity strategist at Bank of America Merrill Lynch. "If implemented, this would increase the value of companies and they would spend more on investment instead of keeping their cash idle."
Mr. Abe is also committed to sending more women into the workforce and expanding their representation at the executive level. In addition to already announced plans to increase the number of child-care centers, the latest package mentions tax revisions that would prod more women at home to go to work.
Not all economists are giving a passing grade to the latest plan, citing disappointments over plans to establish special economic zones. They think this should be a flagship of the prime minister's third arrow".
