2013 CEO Message

To our share holders and customers:

The general election held at the end of 2012 brought a sweeping victory for the Liberal Democratic Party (LDP) and a miserable defeat for the Democratic Party of Japan (DPJ). That was the inevitable conclusion reached by the Japanese people who were fed up with three and half years of the DPJ’s childish politics. The politics reminded people of a Japanese popular TV series named “First Errand” in which a little boy sent on his first errand kept repeating to himself that he had to be a big boy. I believe that it was the people’s choice to reject the DPJ for having its mouth empty rhetoric without concrete political actions from start to finish, rather than to vote for the LDP in this election.

The history will repeat itself if the new administration does not change and remains as the same old LDP, which was the very reason for the DPJ’s victory three years ago. It is good to see that growth is focused in its strategic principles. However, the new administration would quickly lose support of the Japanese people if the LDP continues to take a propaganda approach that leads to confusing means and objectives, such as further easing monetary policy and policy of letting the yen fall in value on foreign exchange markets taken over and over again and turned ineffective. It will not be much different from the DPJ controlled politics. Propaganda simply represents what people want to be. The market ultimately determines whether it is right or wrong. The economy is a living thing and can go wild as if to make a mockery of a temporary expedient solution for the government that has limited experience of facing such challenges. The means are the only thing that is controllable. Whether the objectives are accomplished or not hinges on how successfully we can implement the means. It would be unwise to get it wrong.

In terms of economic measures to be taken, I feel that steps should be taken in the supply side, such as a drastic regulatory reform, rather than the traditional public works program of creating effective demand. Vested interest groups’ stronghold sectors are diverse and include agriculture, medical, nursing, childcare and education, among others. As you can tell, these areas cannot be an industry. These are the areas where supplies have been managed and controlled by the government. Meanwhile demand has been created based on supplies. The government may insist that it has been managing supplies based on demand, but that is absolutely impossible. After the World War II, the Japanese economy was led by the supply sector, mainly manufacturing, which generated new demand one after another by using the wisdom of the private sectors. Originally, there were no vested interests then. There was only fierce competition. That is why the wisdom was developed. These industries are turning their strategic interest and attention towards countries outside of Japan, leaving only the areas that strongly supported by the government. This is another reason why Japan is mockingly referred to as a typical socialist state. Meanwhile, there are abundant overlooked talented human resources who can exercise their wisdom in these areas. I believe that we can only grow by getting rid of vested interests and by bringing together the wisdom in these areas.

Creating new demand that did not exist before is far more effective for growth than boosting the existing demand. If the supply side is restructured by creating new demand, it will help close the supply/demand gap. Some people may argue that it is exactly the structure of deflation, but keeping the outdated and wasted supply sector will only result in more loss of national strength. Most of all, a regulatory reform is the least expensive solution for Japan which has a tremendous fiscal deficit. The extension of the socialist idea may lead to the ever-expanding fiscal deficit and the national financial collapse could cause considerable damage to the lives of the people, something similar or even worse than what had happened when Japan lost the war 70 years ago. This is because the difference in the level of the cliff is far greater than what it was back then. 

However, this can be only achieved by facing the powerful vested interest groups created under the administration of the LDP after the war. People with vested interests are desperate. In fact, it was demonstrated in their smart move to switch their support from the LDP to DPJ in the recent regime change. As a result, the regulatory reform which was taking place under the DPJ administration came to a complete halt and all the valuable ideas for solving issues developed through discussions among private and public sectors as well as the government are now collecting dust in the warehouse of the Cabinet Office. Vested interest groups are probably having a good laugh. The new administration which made a comeback to power as a result of error by the opponent is now put to the test whether the LDP is prepared to move the regulatory reform forward. The regulatory reform means the selection of “the wisdom of the private sector, rather than the wisdom of the public sector”. I hope to see the LDP taking the political initiative in this transition.

No matter how the political landscape changes, it is only a phenomenon of changing times. It is just a change in environment for each individual after all. Of course we are affected and tossed about by such changes. But if you simply accept it as destiny, humans would need no effort. As I said last year, unless we have a spirit of “living autonomously to get the real freedom by doing so,” it would only arouse ressentiment in everybody’s heart. I believe that dissatisfaction is a non-autonomous, negative feeling against others, while anxiety is an autonomous, positive feeling toward oneself. Peace of mind is something you must seek for yourselves and is not given by someone else. It should have nothing to do with the political slogan.

I’m turning sixty this year. One year, which represents a sixtieth part of my life. Comparing life to a clock, it means one minute of one hour. It will be counted by seconds from next year onwards. Well, that’s within the margin of error for the clock I used as a child. You may think that I’m bearish to say such things, but I feel quite the opposite. I feel positive about the rest of my life. It seems like my life so far has been a practice run to live autonomously. Now I can tolerate some anxiety.

Creative destruction is my principle as a president. I believe that this year marks the year of destruction for new creation. I’m determined to carry it through. “Ever focused on our retail customers” is our motto and has never been changed for nearly 100 years since our establishment in 1918 to today. We hope you understand that this is a strategic move to accomplish the objective. Your continued support is greatly appreciated.

Michio Matsui
President & CEO
Matsui Securities Co.,Ltd.