J@pan Inc Magazine Presents:
T H E J @ P A N I N C N E W S L E T T E R
Commentary on the Week's Business, Technology and Cultural News
Issue No. 259
Thursday, January 29, 2004
Subscribe for FREE:
@@ VIEWPOINT: Japan's FSA Takes on the World
================ SEMINAR =======================
Entrepreneur Association of Tokyo: February Seminar
Mike Alfant, President of Building2 and Chair of the High
Technology committee of the American Chamber of Commerce in Japan
will be presenting, "Keeping six inches of water above your head."
Date: Tuesday, February 3rd
Stay Competitive -- RELOCATE
How does a company cut costs without slashing its workforce?
If it operates in Tokyo -- the world's MOST expensive city --
relocating parts of its operations can save money fast.
Wakayama offers a software development division, cheaper offices,
lower personnel costs and subsidies and support from the prefectural
government. To find out more, visit:
============== CONFERENCE ======================
Economist Conferences presents:
FOURTH ROUNDTABLE ON HEALTHCARE REFORM IN JAPAN
Taking the pulse of patient-centred reforms
February 10th 2004, Tokyo
Discuss key issues for IT providers
Assess the business opportunities for IT and Internet providers within
the healthcare system
Gain insights into the financial impact of IT on the running of
@@ VIEWPOINT: Japan's FSA Takes on the World
Just when we were starting to get used to the idea of the Japanese
Financial Services Agency (FSA) being a bit toothless and ineffectual,
the new kid on the administrative block has started to get tough.
Over the weekend, it appeared very much as though it was business as
usual for Takenaka and his merry crew of bank inspectors. A rumor broke
some time ago that UFJ was sitting on a far worse bad loan problem
than it was currently admitting to, and that even with its slow methods,
the FSA would eventually get round to spotting this apparently
On Saturday we were jolted out of our weekend torpor by an authoritative
article in the Nikkei which said as much. In a lovely piece of drama,
it even described a room within UFJ head office where a second -- and
more realistic -- set of accounts were stored. The article boldly
paraded its "insider" knowledge that the FSA was set to launch a special
probe into the bank's activities.
Now, this being the Nikkei -- a platform for seemingly infinite leaks
from government and industry alike -- the market was inclined to believe
the scoop. Shares in UFJ tumbled and brokers whistled-up a series of
"worst case scenario" investment advice memos to their clients. UFJ's
prompt and categorical denial of both the probe and the naughty room
were ignored for entirely historical reasons. Leaks to the Nikkei tend
to be on the money, and all too many denials so often turn out to be
worth less than the fax paper they are issued on.
But this time, it does seem that the Nikkei got it wrong. The FSA is
indeed conducting a "special probe" into UFJ activities, but it is also
doing so into all the other banks -- and it told the market about that
ages ago. Its only obvious fault is to call the probes "special" when
"normal" would perhaps have been a less dramatic way of putting it.
Rumors among the Japanese press suggest that the Nikkei hack responsible
for all this is now looking for a job on a magazine somewhere in Tochigi.
The incident was marked by the now standard criticisms of the FSA: that
they were incompetent for not finding the alleged problem before, and
that their cries of "no comment" when asked about the Nikkei article
were lily-livered and unhelpful. In fact the agency seems to have done
the right thing. When you think about it, the idea of a room full of
more realistic accounting of the bad loan problem, while worrying, is
also conversely rather heart-warming -- at least someone at the big
banks is skilled enough at risk-assessment to know that the bad
loan problem needs constant monitoring.
But what about all that "toughness" we mentioned in the first
paragraph? Well, the FSA -- in addition to battling poor journalism
from the Nikkei -- is also heading off to London to fight in the
corner of Japanese businesses who list stock or bond on the London
New rules under consideration by the UK Financial Services Authority
(FSA) would, by 2005, make the accounts submitted by Japanese companies
listed in London, or issuing bonds there, unacceptable. The proposed
changes would insist that equity or debt issuers with either a primary
or secondary listing in London would by required to use International
Accounting Standards (IAS) or US Generally Accepted Accounting Principles
The Japanese FSA believes that the rule would force companies to shoulder
the unnecessary, but very large, expense of producing a second set of
accounts simply because they want to raise money on London's otherwise
attractive capital markets. Some of Japan's biggest banks and industrial
titans are threatening to leave the London Stock Exchange (LSE) entirely
if the British authorities do not change their minds.
Japanese authorities believe that their country's accounting standards
already match those demanded by Britain and the EU, and argue that their
early 90s version of the City's "Big Bang" has brought Japan GAAP up
to a par with other apparently acceptable systems.
"Japan is a big economy and a big capital market. All we are saying is
that our accounting standards should be treated as equivalent to IAS,"
says Naohiko Matsuo, a member of the FSA delegation headed to London.
The FSA's letter added its own stark warning that the new rules would
discourage Japanese companies' activities within the City of London and
"shift the focus of Japanese financing efforts outside Japan to non
Love them or loathe them, this is all pretty tough stuff. The FSA has
managed to get the powerful Keidanren business lobby on its side, and
that group will also be making its strong feelings on the matter
known to the authorities in London.
Remember when MITI was the most powerful ministry in Japan and could
charge around the world telling business leaders and governments how
it was going to be? The FSA is full of bright young things, so watch
-- The Editors
================= IT PROGRAM =================
Temple University Japan presents "The Temple IT Program."
Certification in two key IT areas: Computer Programming and Software
Study to get a great job in IT, retrain to improve your career in IT,
assess and raise IT staff technical skills. Courses based on
leading-edge course content from iCarnegie
(Carnegie Mellon University).
More info: http://www.tuj.ac.jp/itp/newsad.html
There are 70 Million Japanese Web Users
Does your site speak their language?
Webproject.jp offers a one-stop Japanese Web localization solution
for foreign enterprises. We employ the right resources and provide
a transparent costing system. Our service line includes Web design,
redesign, application development (all technologies), native copy
writing and native user testing. All projects are managed in English.
Visit for more information.
SUBSCRIBERS: 11,713 as of January 29, 2004
Written and edited by Roland Kelts and
Leo Lewis (email@example.com)
CHECK OUT OUR OTHER JAPAN-SPECIFIC NEWSLETTERS:
To unsubscribe from this newsletter, click here:
To advertise in this newsletter, contact:
GET THE MAGAZINE
FEEDBACK AND PROBLEMS
We welcome your viewpoint:
(NB Please do not reply to this newsletter -- it's outgoing only,
so we won't get it!)
(C) Copyright 2004 Japan Inc Communications KK. All Rights Reserved.