Japan Government Urges Companies, Households to Take More Risks

By Toru Fujioka and Tatsuo Ito

July 22 (Bloomberg) -- Japan's government urged companies to be more open to mergers and acquisitions to spur growth in the world's second-largest economy.

``Japan needs a more aggressive risk-taking attitude,'' the Cabinet Office said in its annual fiscal and economic report in Tokyo today. Companies need to improve governance to encourage people to invest more in the stock market, the report said.

Growth in Japan is waning as the global slowdown weakens exports and rising food and fuel costs sap corporate and household income. The nation would be less vulnerable to those external shocks should companies and households do more to increase the value of their assets, the Cabinet Office said.

Japan has the lowest percentage of merger and acquisitions and start-up businesses among major economies, the report said.

Some 30 percent of companies said they want to avoid friendly takeovers with domestic companies in the same industry and 45 percent said they don't want mergers with foreign firms, according to the report.

Households need to invest more of their money that's sitting in bank accounts, the report said. Some 52 percent of households' 1,500 trillion yen ($14 trillion) in financial assets are in cash and deposits. That compares with 14 percent among Americans, a central bank survey showed in June.

To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net; Tatsuo Ito in Tokyo at tito2@bloomberg.net;