Ten lacklustre prime ministers and 11 ineffectual "emergency packages" has bred cynicism and contempt among the Japanese people. The reaction of the financial markets to the latest reform proposals package was as underwhelming as ever.
The key steps call for Japan's 16 biggest banks to write off US$104 billion in non-performing loans within two years. The government says it will also establish slush funds to buy some of the gigantic share portfolios held by the banks. It plans to raid the ¥15 trillion (US$135 billion) Deposit Insurance Corporation crisis account to help raise the money. The consensus is that the measures may not work.
The fact that the gnarled fingers of prime minister Yoshiro Mori have finally been prised from the levers of power is a plus. But his successor is being set up to carry the can at the upper house elections in July, where the ruling LDP party will get a pummelling. According to the Japan Times, it scarcely matters who gets the top job in what the paper calls a "karaoke democracy". Provided he sings from a prepared song book, everyone on the government benches in the Diet is satisfied.
However, radical problems foster radical solutions. Kuniko Inoguchi, professor of political science at Sophia University, has called for a woman to be prime minister. He says he is certain a Japanese woman, whose "exclusion from the mainstream of society and consequent absence of vested interests for them to protect", would not shy away from carrying out tough reforms. What he doesn't explain is how a Japanese Margaret Thatcher could stay in power long enough to see her program through. The revolving door at the office of the prime minister means that the architect of the latest "emergency package" resigns almost immediately.
The proposed lifeboat to rescue the banks from their mainly dud US$340 billion investments is similar to the vessel launched by Hong Kong in 1999. But there are major differences. The money that was mobilised to support the stock market was invested in blue-chip stocks, and recouped through a Tracker Fund floated off to the Hong Kong public. Japan's banks are lumbered with cross-shareholdings amounting to 40% of their equity investments, together with a rag-bag of corporate collateral. These are the sort of assets that are continuing to lose value as the economy flounders and wealthy Japanese consumers remain in hibernation. The authorities may not have acted at all, save for the fact that the Nikkei fell to a 16-year low of under 12,000 on March 15. That is the level that would oblige the banks to revalue their holdings to the open market price.
The Bank of Japan moved four days later. By performing a backflip and returning to zero interest rates, BOJ governor Masaru Hayami signalled that he would print more money, increase buying of bonds, and flood the markets with liquidity.
Tokyo has again done the region no favours when the need to maintain growth is paramount.
Censorship Could Scare Off Investors
When Vietnam decided to update its draconian state-secrets laws earlier this year, there was some optimism among the country's liberals. After all, the leaders and bureaucrats apply their "Top Secret" stamps with dismaying regularity. Even foreign magazines, such as the one you're reading now, can suddenly be off-limits.
However, hopes were dashed when the new legislation finally came through. It was the same old absurd restrictions, with yet another caveat: disseminating anything deemed sensitive through the internet also became a fearful crime.
The internet is the current pet peeve of totalitarian governments worldwide. About 50 countries prevent their residents from accessing the internet, either partially or wholly, according to a recent survey. Indeed, even possessing an unregistered computer in Burma (Myanmar) makes you liable to 15 years' jail.
Most defenders of restrictions on the net argue they're necessary to preserve social stability, remove unwanted "foreign influences" or prevent minors accessing pornography. But the lack of information availability caused by restricted access is causing untold economic damage, especially to small businesses. The internet is a major factor for economic growth, thanks to online trade and the exchange of technical and scientific information.
Contrast Hanoi's attitude with that of Malaysia, a nearby nation whose government is not particularly noted for its encouragement of free speech. Kuala Lumpur has reiterated that it will not impose controls on internet use, though, of course, "subversive" activity and defamation would be monitored.
Asia's traditional incentive to foreign investors - low-cost labour - has become less attractive. Multinationals are now more concerned with education, skills and infrastructure.
Malaysia, eyeing Japan, India, South Korea and Hong Kong, knows it has to keep pace. Vietnam, Burma, Laos, and even China, with their IT development hampered by a lack of access, will lag behind.
"I believe this will be one of the biggest determinants of economic competitiveness going forward," Koh Boon Hwee, chairman of Singapore Telecommunications, said recently. "A country that falls behind will have a tough time catching up."