Press Conference by Minister Nishimura (Excerpt)

*Note: This is a provisional translation for reference purposes only.

10:16-10:41 a.m.
Friday, February 24, 2023
Press Conference Room, METI Main Building

Opening Remarks

Headquarters for Comprehensive Measures on Prices, Wages, and Livelihoods

 I would like to begin by talking about the Headquarters for Comprehensive Measures on Prices, Wages, and Livelihoods.
 I have reported on the progress of the supplementary budget and other matters to the headquarters.
 In response to soaring energy prices, we are starting an operation to mitigate sudden fluctuations in electricity and gas prices this month. We are implementing mitigation measures allowing all customers to check how much of a discount they received for their consumption in each month starting in January.
 Regarding the regulatory rates of electricity, seven major power companies submitted applications from last November to January for price increases. I reported that we will closely scrutinize their fuel cost estimates and efforts to improve management efficiency.
 I also reported that certain projects will be implemented as soon as possible. These include the subsidies for improving the efficiency of LP gas businesses, energy efficiency examinations for SMEs, and subsidies for promoting investment in equipment with improved energy efficiency.
 On another point, the Consumer Price Index (CPI), which was announced today, has increased by 4.3%. It is 3.2% for core products excluding fresh food and energy, which is quite high. Electricity and gas prices rose considerably in January. They reflect fuel costs five to three months beforehand, with January prices reflecting fuel costs in August, September, and October last year. As you know, the price of LNG peaked around September and is still very high at the moment, and the exchange rate was in the region of 150 yen around October 20, when the yen was at its weakest. This reflects the high fuel prices coupled with the low exchange rate, which resulted in high import prices in terms of yen. We will continue to carefully consider the fuel cost estimates and exchange rate.
 Next, we had roundtable discussions with large companies and SMEs the other day in order to foster momentum for continuous and structural wage increases. Many companies are working very actively and positively toward raising wages. I welcome the fact that various other companies have announced wage increases one after another, which I think is a proactive, positive development.
 In addition to the tax credits for wage increases that we enhanced this fiscal year, we have secured a budget to support thorough reskilling with a view toward labor transfers to growth areas, and I reported that we will advance this policy steadily.
 The key point is to raise wages in SMEs, which account for 70% of Japan’s total employment. For that purpose, I reported that we will thoroughly implement price pass-through measures and efforts to improve productivity. Regarding price pass-throughs, we have started giving guidance and advice this month to about 30 main contractors that showed reluctance in price pass-through negotiations. Moreover, for the first time, we have prepared a list with the status of negotiations and price pass-throughs of about 150 companies placing orders. We received responses from their business partners on the pass-through negotiations and have begun our efforts to rectify the situation.
 We will also start accepting applications in late March for business restructuring subsidies for businesses that increase their total salaries by 3% or more relative to their improvement in productivity. We will formulate a system to give extra points to such businesses during the subsidy adoption process. I reported on these efforts.
 Having heard my report, the Prime Minister instructed us to thoroughly and carefully review the applications for the revision of electricity regulatory rates, not sticking to the deadline of April, taking into account all aspects of improving management efficiency as well as the most recent exchange rate and fuel price levels. He also instructed us to discuss measures to curb electricity rates and compile the results by the end of March.
 Given these instructions, METI will firmly and efficiently advance its efforts to implement necessary measures while monitoring trends in energy prices and the impact on citizens' lives and businesses.

Question-and-Answer Session

Situation in Ukraine

Q: Today is the 24th, marking a year since the start of Russia's aggression against Ukraine. I have two questions related to this.
 In line with the other G7 countries, Japan has tightened economic sanctions, including a price cap that set a limit on the transaction price of Russian crude oil. Please tell us your thoughts on the effects of these sanctions.

A: As you pointed out, it has been one year since the start of Russia's aggression against Ukraine. METI has taken measures such as bans on imports and exports in close cooperation with the international community, including the rest of the G7.
 The sanctions by Japan and other countries have had various effects on Russia, including increased commodity prices, the withdrawal or suspension of operations by foreign companies, declining indices of industrial products such as automobiles, and worsening fiscal conditions. In addition, the value of exports from Japan to Russia has decreased by about 40% in the past year. Imports have risen slightly due in part to higher prices. However, the import of some items substantially decreased, with coal decreasing by half, and oil to zero. I recognize that there was also a significant decrease in the import of products other than fuel.
 In addition, the worsening business environment, countermeasures by the Russian government, inability to transfer money, and other factors are having various impacts on Japanese companies. We will conduct hearings from companies based on their circumstances and needs in cooperation with the relevant ministries and agencies. so that they can make appropriate decisions, including withdrawal from Russia. We will closely communicate with them and provide support taking into account each company’s situation.
 The G7 online summit will be held this evening, and I will continue to respond appropriately in cooperation with the rest of the G7 and the international community.

Situation in Ukraine

Q: Regarding the crisis in Ukraine, I believe that Japan is expected to play a role in reconstructing infrastructure as part of its support in the future. Please tell us your thoughts on how Japan should provide economic support.

A: Japan has been providing emergency humanitarian support and financial support, and METI in particular has supplied generators and given related support to cope with the winter.
Furthermore, within the jurisdiction of METI, export and investment insurance is being underwritten by NEXI, as we announced at last year's G7 Trade Ministers' Meeting in Germany. By doing so, we can revitalize business in Ukraine, and increase exports from Ukraine by creating various partnerships and supporting the development of sales channels through JETRO. These initiatives include the trading of products from Ukraine through the One Village One Product movement, and business matching events in JETRO's webinars.
Through these efforts, we are promoting exports from Ukraine and collaborating with Ukrainian startups, and we will thereby push forward Ukraine's economic recovery through trade and business. All insurance provided by NEXI covers war risks, and we will provide solid business support.
In addition, at today's G7 online summit, we will continue to cooperate with the rest of the G7 and the international community and give close support to the people of Ukraine who are facing harsh difficulties in this cold winter.