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Speeches and Statements by Prime Minister Junichiro Koizumi

(Provisional translation)

Press Conference by Prime Minister Junichiro Koizumi

January 5, 2004

A Happy New Year to you all.

Last year was a difficult year, both diplomatically and domestically, but I would like to share my hope with everyone that this year will be a good year.

While the New Year is being celebrated by the general public, the members of the Self Defense Forces (SDF) are already moving ahead with the preparations to extend humanitarian and reconstruction assistance in Iraq. In addition, the SDF is also active in counterterrorism assistance activities in the Indian Ocean as well as nation-building operations in East Timor. Furthermore, as a major earthquake erupted in Iran, the SDF has also worked together with Japanese civilians in rescuing the victims.

Even though Japan's economic and social conditions are adverse one, Japan will provide assistance as much as possible in an appropriate manner to the countries facing hardships, or for victims experiencing hard times as a result of disasters. I would like to express my heartfelt respect for the members of the SDF, the civilians, people working for NGO, and government officials, all of whom are taking part in such activities in severe conditions, from the very beginning of the New Year, on behalf of the people of Japan.

I believe that difficult conditions will continue both domestically and diplomatically this year as well. In particular, with regard to the reconstruction assistance to Iraq, each country in the world is in the midst of making utmost efforts with a view to building a government by the people of Iraq in June. The people of Iraq are making efforts to establish a stable, democratic government with a hope of rebuilding and reconstructing their own nation. I believe that Japan should also continue to provide assistance to these efforts in view of the fact that without stability in the Middle East, there is no peace and stability in the world.

In regard to North Korea, Japan consistently holds the basic policy of normalizing relations between Japan and North Korea upon reaching a comprehensive solution of the issues of abduction, nuclear weapons and missiles in line with the Japan-Democratic People's Republic of Korea (DPRK) Pyongyang Declaration. I would like to continue to urge a sincere response from the North Korean side according to this policy. Last year, six-party talks among North Korea, the United States, Republic of Korea, People's Republic of China, Russian Federation and Japan were held, and I hope that the six-party talks will resume as soon as possible this year. Japan will continue its steadfast endeavors to solve the pending issues.

On domestic issues, I believe that the structural reform policy-the policy of "without reform there will be no growth" that I have pursued since my appointment as Prime Minister two years ago-is now getting on the right track. We have sowed various seeds of reform, and they are now coming to be seen. In order to nurture the buds into a large tree, I would like to continuously promote reform. In particular, the policies of "leave to the private sector what it can do," and "leave to the localities what they can do," have become more concrete and will now be deliberated at the Diet. In regard to the issue of privatization of highway-related public corporations, with the cooperation of the private sector members of Promotion Committee for the Privatization of the Four Highway-related Public Corporations, we were able to formulate a concrete plan that basically honors the opinions of the Committee. The bill on privatization will now be deliberated in the Diet and I hope to advance the preparations to realize the privatization during FY2005.

Furthermore, the year 2004 will see full-scale developments on the issue of the privatization of the three postal services, which is considered the "heart" of the reforms in bureaucratic areas such as civil service, fiscal investment and loan program, and special public corporations. Up until now, the discussion on whether to privatize or not and whether private or national post office was better, had absolutely no coherence. While there were both pros and cons for this issue, there were overwhelmingly more critical arguments than supportive for privatization in the political arena. However, the issue has finally been settled in favor of privatization on the occasion of the House of Representatives election held in 2003. With the premise of realizing privatization, I hope to compile a privatization plan by this autumn, taking into consideration the views of various parties. I would like to make preparations in 2004 so that a bill on privatization can be submitted at the Diet in 2005. On administrative and fiscal reform, the policies of "leave to the private sector what it can do" and "leave to the localities what they can do," and the significance of completely eliminating the excesses in civil service are finally at the threshold of the "heart" of reform. While consulting many experts and people in various fields, I would like to compile the privatization plan that ensures the provision of considerably better services than the national post office with a sense of confidence, and provides great potential for its development.

Many people are most concerned about the issue of the economy. Despite ongoing adverse economic conditions, some promising signs have been seen since last year. The real economic growth rate and the nominal growth rate exceeded government forecasts and have turned positive. The number of bankruptcies has declined for 12 and 13 consecutive months. Furthermore, the vigor of the private sector has gained in recent times with corporate profit recovery and, ambitious efforts for future capital investment are seen in various places.

Moreover, a minimum of 10 million yen in capital was legally required in order to establish a corporation in Japan. However, in order to support the people with motivation to start up corporations, measures were introduced to lower the minimum amount of capital to one yen in 2003. As a result of this measure, more than 7,000 new corporations were established in 2003. I strongly felt that there are people who are motivated, and that I needed to be resolute in my pursuit of reform that supports this kind of motivation in each and every person as well as each and every company in Japan. The disposal of non-performing loans, which has long hindered the economy, is on the steady decline in terms of both amount and proportion.

In terms of employment, the unemployment rate is still 5.2%, a sign that the situation remains severe. However, the number of job openings is increasing. I believe that more ingenuity is necessary in order to eliminate the so-called "mismatch" between the number of job openings and the people who are seeking work but not finding work. Therefore, I believe that we must continue to make efforts in employment measures, particularly in eliminating this "mismatch," and promote measures in visible ways so that young people can support themselves.

At any rate, I have received a lot of criticism about the reform policy. However, the reality is that we have been able to formulate supplementary budgets without increasing the issuance of government bonds. I believe that the achievements of reform are gradually becoming evident, as elucidated by the promising signs that have been seen in the economy while public investment is declining. Although financial and fiscal conditions remain adverse, I will continue to maintain this reform policy and nurture the buds of reform into a large tree. Japan has great latent potential. Japan also has underlying strength. It is important not to become pessimistic. In this day and age, if we keep striving with a vision for the future, we can achieve it. We must not despair in pessimism. I will promote a reform policy that will cultivate the motivation in many people, and advance reform that will enable many people and companies to take on new challenges.

I ask for your continued support and cooperation in 2004.