Japan’s Kishida Calls for IPO Rethink in New Capitalism Drive

By BLOOMBERG

Prime Minister Fumio Kishida called for a shakeup of the initial public offering process to better serve startups as Japan’s new capitalism panel released its recommendations ahead of a stimulus package.

In a 21-page document that came out Monday, the panel pointed to some of the themes likely to feature in the package of economic measures promised by the premier later this month. 

The panel diverged from the tone of similar committees set up by Kishida’s predecessors by seemingly criticizing short-termism, and attacking a system that favors IPO investors over startup founders’ ability to secure funding. 

“By putting the most critical issues in the upcoming economic package and putting them into action, I hope to kick start a new form of capitalism,” said Kishida in remarks at the end of the panel session. 

The panel’s recommendations and the coming stimulus will indicate the direction of Kishida’s administration and show how aggressively he wants to spend to achieve those goals. 

After another likely contraction of the economy over the summer, Kishida needs to deliver measures that can effectively shore up the recovery and support for his government ahead of further elections next summer.

While stimulus measures will need to support the recovery in the short-term, the report made clear that support for startups is a key area where the premier believes the economy can be revitalized over the longer-term.

“The Japanese listing system is not one that is kind to entrepreneurs who are tackling new challenges,” said the report. “Some point out that the current system is set up so that the customers of security firms make money, rather than the startups themselves.”

Among other key points the panel called for renewed investment in digital, green and chip technology, and greater efforts to improve wealth distribution. The report lacked specific details.

While the tone varied from previous reports, the recommendations still kept a lot of policies intact from former Prime Minister Yoshihide Suga. The panel called for support for a switch to green energy including help for the car industry. 

Building battery supplies for electric vehicles and production facilities for semiconductors also warrant close attention from the perspective of economic security, the report said.

To ensure fairer pay, the panel recommended larger tax breaks for companies raising wages and additional support for smaller and mid-size companies to boost compensation even if they are technically in the red.

Gross domestic product numbers due for release Monday should pave the way for the government to reveal the details of its latest stimulus package, with Nov. 19 the likely date, according to Kyodo News.

The measures will likely include handouts of 100,000 yen ($880) for children under 18, a resumption of last year’s popular travel discount campaign, and pay hikes for public sector workers such as nurses, caregivers to the elderly, and kindergarten teachers.

The Nikkei newspaper also reported that 50,000 yen cash handouts for children may happen within the year, using remaining reserve funds for Covid-19 responses. Some 2.6 trillion yen remains in that emergency fund, according to the Finance Ministry.

The Sankei newspaper reported that the package will be worth around 35 trillion yen.