MW-89 -- Roll the Dice

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J@pan Inc Magazine Presents:
M O N E Y W A T C H
Weekly Financial Commentary from Tokyo
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Issue No. 89
Monday, August 23, 2004
Tokyo

CONTENTS
@@ VIEWPOINT: Roll the Dice

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@@ VIEWPOINT: Roll the Dice

August is almost over and the Japanese Diet is taking a rest
from its amazingly exhausting one-week summer session.

The DSP was up in arms over the session ending so quickly, but once
the cameras were off they were all on their way home. Of course,
the short session had the positive effect of keeping Koizumi off the
TV more than usual. If it weren't for the Olympics and his
congratulatory phone calls to medalists, another reminder of his
infatuation with the US, we would be further blessed. Of course,
I know we can't ask the athletes to lose, but then with Track &
Field coming up it shouldn't be necessary to even ask.

So we must return to the question posited in a previous article:
Does the elected government really matter in Japan? Unfortunately,
it has demonstrated this year that it can definitely make matters
worse. As an example, the last few years has seen what the Japanese
call the financial Big Bang, a round of deregulation concerning the
financial sector that will culminate with savings accounts no longer
being fully insured next spring (they will only be insured up to 10
million yen).

One of the measures loosely tied to this Bang that most people don't
hear about is the revised Trust Business Law, which was submitted
to the Diet in March 2004. The proposed revisions consisted of
expanding the types of property that can be placed in trust, from
real-estate and other tangible financial property to intellectual
property rights, et cetera. The other material change was the
planned expansion of entities that can have property placed in
trust, from the present exclusive group of financial institutions
to broader categories, including joint stock corporations and
other bodies that meet certain criteria.

This was supposed to create transparency, lead to the monetization
of intellectual property, further diversify the means to procure
capital and eventually form a greater array of trust instruments.

Unfortunately, the dilly-dallying of the central government has
delayed passage of this bill and negatively impacted the numerous
companies that -- heaven forbid -- had begun taking the steps to
launch a trust business in a timely fashion.

Well, maybe it will pass during the next session, and maybe not. I
personally expect a lot of "ox walking" in the Diet this fall.
It seems to be the best approach the opposition can ever come up
with.

Fortunately, there may be a significant positive on the horizon. The
faux casino night recently held by Tokyo Governor Shintaro Ishihara
and all the housewives being arrested at illegal gambling establishments
seems to have convinced the central government of a new untapped source
of revenue -- and there are indications the government is getting up off
its duff. With legal gambling (horses, boats, motorcycles and bicycles)
all falling off -- except for the weird following that the horse Haru
Urara and her 100+ race losing streak enjoys -- casinos clearly
offer an excellent means for jump starting many economic sectors and
regions (witness Native Americans). Strategically placed in Okinawa,
Hokkaido, Miyazaki and a few other locales, the casinos would rescue
and stimulate the all-important construction sector, airlines, tourism,
youth employment, et cetera. If the government backs up the current
rumors, it could even help Koizumi indirectly reach his tourism goal.

The Chinese have exhibited their distaste for Japanese soccer, but
Disneyland and gambling are a definite winning combination in their
eyes.

So roll the dice: Pass the Trust Business Law next year to bring
transparency to the trust business, and allow casino legislation
to add yen to the government's coffers.

Maybe the government can still make a difference.

-- John Charles-Decourcy

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STAFF
Written by John Charles-Decourcy (jcd@japaninc.com)

Edited by J@pan Inc staff (editors@japaninc.com)

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