Press Conference by the Chief Cabinet Secretary (Excerpt)

1. Opening remarks
(Abridged)

2. Q&As

REPORTER: Stock prices continued falling today and the Nikkei Stock Average temporarily dropped below 15,000 yen. Meanwhile, the yen strengthened and yesterday reached a level of 110 yen per dollar at one point, which I believe is something that will negatively affect corporate performance. If these trends continue for an extended period, I believe it would undermine the government’s core policy of fostering a virtuous economic cycle that helps corporate earnings to recover. What are your thoughts on the outlook and other aspects?

CHIEF CABINET SECRETARY SUGA: To begin, the Government is closely monitoring market trends. Fluctuations are appearing in Japan’s markets too amid growing risk-avoidance activity in financial markets globally. Looking at the real economy, however, corporate profits are currently at all-time highs and I believe the Japanese economy is on solid footing. The Government thus thinks that recent investor sentiment is overly pessimistic. Without being overly rattled by market shifts, the Government will pay attention to domestic and overseas conditions while cooperating with the G7 countries and other members of the international community. We will swiftly realize the fiscal 2015 supplemental budget and are committed to steadily proceeding with necessary measures to solidify a beneficial cycle for the real economy. Regarding the foreign exchange market, I think agreements among G7 and G20 members confirm that sudden market movements are not preferable. The foreign exchange market recently has exhibited rough price shifts, and we intend to continue to monitor the market with vigilance and act appropriately if necessary. At any rate, the Government plans to conduct a review of policy cooperation in light of recent financial market conditions ahead of the G20 meeting taking place in Shanghai in late February.

(Abridged)

REPORTER: I have a question about Japan’s independent sanctions against North Korea. Could you indicate which of the list of sanctions announced the other day have already taken effect as of today?

CHIEF CABINET SECRETARY SUGA: Regarding the sanctions being adopted this time, I expect them to follow procedures of a Cabinet meeting decision and National Diet approval as needed in accordance with related laws. For example, the ban on third-country ships that make a port call in North Korea from entering Japanese ports requires a Cabinet meeting decision and then follow-up approval by the National Diet. The ban on money transfers in principle also needs a decision at a Cabinet meeting. Broadening the scope of asset freezes similarly requires Cabinet approval. Regarding other procedures, I expect implementation following close cooperation among the respective related ministries and agencies on rapid and suitable reviews and detailed operations. We intend to proceed with steady implementation regarding restriction measures on movement by people and measures that do not require a Cabinet meeting procedure, as you just suggested. Please speak to the respective ministries and agencies about the details.

REPORTER: This is related. North Korea has opposed the Republic of Korea’s (ROK) independent sanction of suspending operations at the Kaesong Industrial Complex, by claiming it constitutes a declaration of war. It unilaterally designated the Kaesong Industrial Complex as a military zone and also unilaterally announced a shutdown of military communication between the North and South. What are your thoughts about this North Korean reaction?

CHIEF CABINET SECRETARY SUGA: The Government intends to continue close cooperation with the ROK, the United States, and other related countries while monitoring these developments between the North and South surrounding the Kaesong Industrial Complex. We have a positive view of the ROK government’s announcement, and the Government believes that this action fits with our measures of effectively restricting people, goods, and money flows to North Korea. In any case, the Government plans to make its utmost efforts to realize a comprehensive solution to various issues, such as abductions, nuclear weapons, and missiles, by placing heavy pressure on North Korea while cooperating closely with related countries and particularly at the Japan-United States-ROK level.

(Abridged)