Koizumi says small businesses may not survive

Prime Minister Koizumi Jun'ichiro admitted that there is the possibility that some businesses cannot survive the process of bad loan write-offs.

This was in answer to the one-on-one debate in the Diet on June 13 between the prime minister and Japanese Communist Party Chair Shii Kazuo.

Shii's question was: "If the 16 major banks follow the government policy and write off their bad loans from their books, it is estimated that 200,000 to 300,000 small- and medium- sized businesses will go bankrupt. Do you think that such a situation should be tolerable as part of 'structural reforms'?"

Prime Minister Koizumi in answer said, "I don't deny the possibility that some businesses will be unable to survive the write-off process." He added that measures would be taken to mitigate the pain if businesses fail and people lose their jobs.

Shii argued that the present bad loans arose from the economic recession lasting for 10 years, and the only remedy is in boosting demand and personal consumption.

Shii said the government policy of rejecting the proper remedy and allowing major banks to write off their bad loans is like thrusting the head of a drowning man deeper into the water.

Prime Minister Koizumi reacted rather emotionally saying, "In which of my statements do you find the passage about pushing someone into the water?"

Following the Diet debate, reporters asked Shii for his comments on the prime minister's response. Shii said, "It became clear that the government has a plan to put pressure on banks to abandon small- and medium- sized businesses. This is why the prime minister showed a strong emotional response." (end)