Isra-Mart srl : Tax cuts, trade deals to buoy Japan firms: minister

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Japan's trade ministry is targeting tax cuts from next year as well as new trade deals so that firms can compete better at a time when the strong yen is hurting their profits.

Japan's recent intervention to stem the yen's rally to a 15-year high was aimed at lightening the burden and had some effect on the markets, but Japan should take other measures as well, new Trade Minister Akihiro Ohata said on Wednesday.

The dollar is expected to stay vulnerable due to lingering concerns over the U.S. economy. On Wednesday, it fell to its weakest level against the yen since Japan intervened last week for the first time in six years.

"We should carry out corporate tax cuts when we compile the budget for the next fiscal year. We should also push forward on economic partnership agreements," the 62-year old veteran lawmaker told a group of reporters.

A cut in corporate taxes of at least five percentage points is needed to help companies compete on level ground with their rivals abroad, Ohata said.

Japan's effective corporate tax rate is at around 40 percent and one of the highest in the world. Another hurdle for local companies is higher tariffs than their rivals on exports to countries which have no trade agreements with Japan.

Unlike South Korea, Japan has been slow to make free trade agreements, with the country's protected farm sector a major stumbling block in lowering bilateral trade barriers.

But Ohata said his ministry and the farm ministry will soon start working together to address the farm issue. He did not elaborate on which countries Japan wants to make deals with.

The trade ministry is also pushing for more use of nuclear energy as part of Japan's drive to aggressively cut CO2 emissions, as well as promote Japanese firms bidding in overseas infrastructure projects.

Ohata, who once worked as a nuclear plant design engineer at Hitachi Ltd, said a single entity to be formed by six Japanese utilities and nuclear power plant makers would make it easier for Japan to win nuclear plant orders.

"As the Japanese government, we'll fully cooperate with it," Ohata said, adding he was ready to go abroad and promote Japan's peaceful usage of nuclear technology, which he said is one of the world's safest.