Japan Needs to Study Risks Before Setting Up Government Investment Fund, Foreign Minister Says.
Finance Minister Fukushiro Nukaga sounded a cautious note Friday toward creating a sovereign wealth fund, saying that aggressive investment was risky. "Active management of public wealth involves high risks. So we need to thoroughly study which part of government money, for what purpose and how it will be invested before making a decision," Nukaga told reporters.
His comments came as the ruling Liberal Democratic Party was to launch a panel later in the day to look into creating a sovereign wealth fund, or a government-run investment pool, similar to those that exist in Singapore, China and several Persian Gulf countries.
Some lawmakers have suggested Japan set up a fund to diversify and seek better returns on the country's nearly $1 trillion in foreign currency reserves, most of which are believed to be invested in safe but low-yielding U.S. Treasuries.
Prime Minister Yasuo Fukuda has also said recently that the government "must be cautious" in managing national assets. The wary comments from Fukuda and Nukaga suggest Tokyo doesn't plan to create a sovereign wealth fund anytime soon.
Although Nukaga noted the importance of managing the national wealth effectively, he pointed out differences between Japan and countries that are already actively investing their national wealth. "These countries that engage in active management have either lucrative oil revenues or good fiscal surpluses, but our county has neither," he said.
Economy Minister Hiroko Ota said the government isn't planning to put a proposal for a sovereign wealth fund in its upcoming economic growth plan. More discussion is needed on the size and management of the nation's reserves, but not on setting up a fund to manage them, she said. "I'm not thinking of explicitly putting in a point on SWFs in the growth strategy plan," Ota said.
In recent months, sovereign wealth funds in the Mideast, Singapore and China have invested billions in U.S. and European banks to help replenish their assets after heavy losses from the subprime mortgage crisis.
Japan Needs to Watch Slowing US Economy
Japan needs to monitor the impact that any U.S. economic slowdown there might have on Chinese exports, many of which are assembled from semifinished products and raw materials from Japan and elsewhere in Asia, the country's economic minister said Friday.
"What shape the U.S. slowdown will take needs thorough monitoring," Economy Minister Hiroko Ota said at a regular press conference. "Overall exports are still expanding, but that expansion is coming at a slower pace."
She said Japanese exports to Asia including China are in good shape, while those to the European Union are flat. "As there is a time lag, we need to closely watch how the slowdown in the U.S. will affect the Chinese economy and how that will affect the exports of Japanese and emerging economies to China," she said. About a fifth of China's exports go to the U.S., Ota said. A large share of those are assembled from components or semifinished materials from Japan and the rest of Asia.
Separately, Bank of Japan Gov. Toshihiko Fukui said the country's domestic economy is slowing on lingering adjustments in the housing sector. "Moves in the Japanese economy are slowing down for now due to the weakness in housing investment," he told a Lower House fiscal and financial panel. However, he still maintained the view that Japan's economy is in a "favorable growth cycle of industrial production, income and expenditure."
Japan's housing starts fell 19.2 percent on year in December, slightly worse than economists' average forecast of an 18.2 percent drop, but much better than declines of 27 percent to 44 percent in the previous three months.
Finance Minister Fukushiro Nukaga sounded a cautious note Friday toward creating a sovereign wealth fund, saying that aggressive investment was risky. "Active management of public wealth involves high risks. So we need to thoroughly study which part of government money, for what purpose and how it will be invested before making a decision," Nukaga told reporters.
His comments came as the ruling Liberal Democratic Party was to launch a panel later in the day to look into creating a sovereign wealth fund, or a government-run investment pool, similar to those that exist in Singapore, China and several Persian Gulf countries.
Some lawmakers have suggested Japan set up a fund to diversify and seek better returns on the country's nearly $1 trillion in foreign currency reserves, most of which are believed to be invested in safe but low-yielding U.S. Treasuries.
Prime Minister Yasuo Fukuda has also said recently that the government "must be cautious" in managing national assets. The wary comments from Fukuda and Nukaga suggest Tokyo doesn't plan to create a sovereign wealth fund anytime soon.
Although Nukaga noted the importance of managing the national wealth effectively, he pointed out differences between Japan and countries that are already actively investing their national wealth. "These countries that engage in active management have either lucrative oil revenues or good fiscal surpluses, but our county has neither," he said.
Economy Minister Hiroko Ota said the government isn't planning to put a proposal for a sovereign wealth fund in its upcoming economic growth plan. More discussion is needed on the size and management of the nation's reserves, but not on setting up a fund to manage them, she said. "I'm not thinking of explicitly putting in a point on SWFs in the growth strategy plan," Ota said.
In recent months, sovereign wealth funds in the Mideast, Singapore and China have invested billions in U.S. and European banks to help replenish their assets after heavy losses from the subprime mortgage crisis.
Japan Needs to Watch Slowing US Economy
Japan needs to monitor the impact that any U.S. economic slowdown there might have on Chinese exports, many of which are assembled from semifinished products and raw materials from Japan and elsewhere in Asia, the country's economic minister said Friday.
"What shape the U.S. slowdown will take needs thorough monitoring," Economy Minister Hiroko Ota said at a regular press conference. "Overall exports are still expanding, but that expansion is coming at a slower pace."
She said Japanese exports to Asia including China are in good shape, while those to the European Union are flat. "As there is a time lag, we need to closely watch how the slowdown in the U.S. will affect the Chinese economy and how that will affect the exports of Japanese and emerging economies to China," she said. About a fifth of China's exports go to the U.S., Ota said. A large share of those are assembled from components or semifinished materials from Japan and the rest of Asia.
Separately, Bank of Japan Gov. Toshihiko Fukui said the country's domestic economy is slowing on lingering adjustments in the housing sector. "Moves in the Japanese economy are slowing down for now due to the weakness in housing investment," he told a Lower House fiscal and financial panel. However, he still maintained the view that Japan's economy is in a "favorable growth cycle of industrial production, income and expenditure."
Japan's housing starts fell 19.2 percent on year in December, slightly worse than economists' average forecast of an 18.2 percent drop, but much better than declines of 27 percent to 44 percent in the previous three months.
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