Never mind the US subprime loan crisis, the main cause of Japan's lackluster economic performance this year is entirely self-inflicted, according to analysts.
While investors are crying out for less red tape, efforts by Japan's government to protect consumers and homeowners have taken the wind out of the sails of Asia's largest economy even as global growth falters, they say.
The Japanese government recently slashed its growth forecast for the fiscal year to next March to 1.3 percent from a previous target of 2.1 percent, following in the footsteps of a host of independent forecasters.
One of the main reasons for the worse than expected performance this year is a slump in activity in the housing construction sector following the introduction of stricter earthquake resistance standards, analysts say.
Housing starts in Japan slumped for the fifth straight month last month, down 27 percent from a year earlier, following falls of 35 percent in October, 44.0 percent in September and 43.3 percent in August.
Japan tightened the building regulations in June after a Japanese architect caused a nationwide scandal by using fabricated data in the building of apartment blocks, rendering them potentially vulnerable to collapse during even a moderate tremor.
Nearly 100 condominiums and hotels designed by the architect were found to have been built using false earthquake resistance data, shocking a nation that endures 20 percent of the world's major tremors.
Following the introduction of the new rules, it now takes more than two months to obtain a construction permit, compared with three weeks previously.
MEA CULPA MENTALITY
"This is a typical Japanese reaction to a crisis," said Professor Noriko Hama, an economist at Doshisha Business School in Kyoto. "A mea culpa kind of mentality drives people into changing everything totally in one go, without really thinking of the consequences, and with total disregard for the actual economic environment."
The nation's construction sector is not the only area of the economy to have been affected by new regulations.
In December last year the government introduced a new law to clamp down on consumer credit firms, drastically reducing the previously high interest rates they were allowed to charge borrowers.
The aim was to prevent poorer Japanese from suffocating under a mountain of debt, amid public concerns that the nation's income gap is widening.
But, according to local media, the move has forced some households desperate for cash to turn to the black market.
The growing web of red tape has also irked investors, adding to worries about the fallout from the US housing slump.
"Japanese policy decisions are based on political, not economic, rationality," Dresdner Kleinwort analyst Peter Tasker says.
"`Safeguarding consumers' is always a popular line to take, even if it involves crushing economically important sectors such as consumer finance and house-building," he said in a report published recently.
SCOURING THE RECORDS
With the consumer in mind, Japan's financial watchdog forced life insurance companies to scour their records dating back more than 30 years over the non-payment of benefits to policy holders who failed to submit claims when they were entitled to do so.
This colossal task took months and required the hiring of thousands of extra workers.
"The total cost for the insurance companies is calculated to be around two billion dollars," said Hitotsubashi University's professor Ryuji Yasuda.
"Economically, it is a huge damage," he said, adding that the measures had also raised a distrust of insurers among consumers that could inflict long-term damage on the industry.
"Now the policy holders view everybody as cheaters. It creates some very irresponsible activity of the consumer. In the US, unless you claim, you are not paid -- it is your responsibility.," he said. "But here, unfortunately, they are overprotecting the consumers," he said.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source