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Japan after Abe

Suga vows to digitize government and push down mobile fees

PM-in-waiting says economy is current focus, not the next election

Yoshihide Suga wants reform, notably in the government's response to the pandemic and with large telecoms and their predatory pricing policies. (Nikkei montage)

TOKYO -- Fresh from his anointment as president of Japan's ruling party, Yoshihide Suga vowed Monday to focus on tackling the coronavirus pandemic and the nation's economic woes, rather than calling a snap election.

"I want to do work," not elections, Japan's prime minister-in-waiting told reporters in Tokyo a few hours after his widely expected landslide victory in a Liberal Democratic Party vote. "What people are asking us to do is bring the coronavirus under control and get the economy back on its feet."

Some big hitters in the LDP, including Finance Minister Taro Aso and Defense Minister Taro Kono, have recently hinted at an early election. The cabinet has had a high approval rating since Prime Minister Shinzo Abe's sudden resignation last month, and the main opposition parties only last week merged to form a political bloc.

Suga, who is set to be elected prime minister in a special parliamentary session on Wednesday, said he would put reformers in his government, rather than trying to please the factions within the 65-year-old ruling party. He hinted at the possibility of a sweeping cabinet reshuffle.

"I will choose people who are eager for reform and capable of getting things done," Suga said. "I will appoint people who share my policy goals. We have a responsibility to get things done for people of this country."

He said he will push ahead with deregulation and put an end to ministry sectionalism, vested interests and the practice of blindly following past precedents.

As part of this plan, he said he sought to bring Japan up to speed with Asian neighbors on digitization.

"My goal is to allow people to receive government services 24-hours-a-day, 7-days-a-week as long as they have the My Number social security card," Suga said.

Japanese Prime Minister Shinzo Abe and his likely successor, Chief Cabinet Secretary Yoshihide Suga, raise their arms after Suga was elected as the new head of the ruling Liberal Democratic Party on Monday. (Photo by Uichioro Kasai)

Suga, a 71-year-old eighth-term lower house member, is a well-known policy wonk. He has said he is eager to reorganize the Ministry of Health, Labor and Welfare, cut mobile phone bills, and consolidate regional banks after becoming Japan's prime minister.

Based on his track record as chief cabinet secretary -- who is in charge of coordinating government policy -- and Minister for Internal Affairs and Communications -- which is in charge of telecommunications policy -- Suga is a reformist.

But some of his views are worrying to government bigwigs and industry leaders, setting the stage for a long slog if not outright pushback.

"Many of the policies that have failed to advance smoothly involve multiple government offices," Suga has said, hinting at the use of political clout to force government ministries and agencies to end their isolation from each other. This remark seems directed at reorganizing the Health Ministry, which has often been criticized for delays in dealing with the coronavirus pandemic.

The health ministry is having problems coordinating with other relevant ministries: the Ministry of Economy, Trade and Industry to alleviate the shortage of medical materials; the Ministry of Education, Culture, Sports, Science and Technology, which oversees university hospitals; and the Ministry of Internal Affairs and Communications, in charge of connecting with local municipalities.

Furthermore, experts claim the health ministry has been too cautious about expanding virus tests, with even Abe showing his impatience.

The ministry, which receives one-third of the government's general account budget, has faced reorganization plans in the past. Over a decade ago, when the ministry was under fire regarding a pension scandal, reform plans were floated.

The ministry's domain covers a huge swath of society, resulting in its minister's voice being heard in the Diet "overwhelmingly more frequently " than other cabinet ministers, according to Suga in 2018, -- a slapdown that highlighted the ministry's growing presence.

Suga has already said he is open to reorganizing the ministry as part of a review of government response to the pandemic after the pandemic is contained.

Another issue that Suga wants to resolve is the relative lack of competition in Japan's mobile service industry, especially on rates.

He talked about cutting rates as communications minister in 2006 and 2007. Later in 2018, Suga urged top carriers to cut fees, suggesting that Japan's mobile rates could be 40% lower. During the LDP presidential election, he said he will try to create "a framework that promotes greater competition among companies."

Mobile carriers complain that rate cuts will eat into revenue needed to invest in 5G. Based on comparison with overseas mobile services, however, Suga said domestic carriers have "wide room" for cutting rates.

Tokyo has the second-highest mobile rates out of six major global cities, according to the Communications Ministry, which compared NTT Docomo's standard rates to those of overseas carriers. For large-volume service plans, Tokyo has the highest rates.

Suga has already stressed the need for lowering rates for large-volume users. Officials in the communications ministry see problematic contracts in the market, such as bundling residential internet access with mobile services, making it difficult for consumers to cancel contracts. To cut rates, Suga will likely speed the elimination of these service plans designed to corral customers.

On the financial front, Suga is set to call for regional banks to merge.

These smaller banks have been battling with a sluggish domestic economy and ultralow interest rates. Suga said on Sept. 2 there may be "too many" regional banks for the future, adding that "[Bank] consolidation is an option."

This view has gained support of the Financial Services Agency, Japan's governmental financial watchdog, which also wants to accelerate regional bank mergers.

A special law will take effect in November that exempts regional banks from certain antitrust rules, a move designed to fast-track consolidations. Suga was a key player in passing the law, coordinating efforts between the FSA and the Japan Fair Trade Commission to make this happen.

But it is still too early to see if these efforts will push more banks to consolidate. As one senior FSA official said, "The final decisions are up to the management of each bank." And in light of the fierce competition between competing regional financial institutions, it may take more than relaxed regulations to have banks integrate.

Additional reporting by Mitsuru Obe in Tokyo

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