Serious business news

Japanese government to hand-out $175 vouchers to 'stimulate economy'
Japan has begun its first hand-out of shopping coupons, part of a government effort to stimulate the ailing economy. Parliament at the same time approved a budget which will pump a further $700bn into the economy.

On Friday, needy people in a district of Tokyo were the first to receive the new shopping coupons, which will eventually be distributed to 35m people across the country. Families with children under 15, and poor or bedridden people over 65, each received 20,000 yen ($175).

The coupons were approved last November as part of a deal between the governing Liberal Democratic Party and the second largest opposition party. and are valid for six months and must be used in the neighbourhood where they were issued. Most people will use their coupons for buying ordinary goods, but the vouchers will also be accepted in some red light districts.

The hand-out began as the Lower House of the Japanese Parliament approved a 5% increase in spending, intended to cover public works projects such as retraining unemployed workers. The $682bn spending plan, which now goes to the upper house for a vote, is packaged with $75bn in tax cuts. It comes at a time when the weak economy has already diminished the government coffers.

Prime Minister Keizo Obuchi expressed relief that the budget had been passed so swiftly. The plan now goes to the Upper House for a vote, but the Japanese constitution allows it eventually to become law even if the Upper House does not endorse it.

Economists are sceptical about Japan's spending plans, which are likely to increase its already heavy national debt. "It doesn't address any of the structural problems in the economy, in fact it does exactly the opposite," said Ron Bevacqua, an economist at Merrill Lynch in Tokyo.

"It allows them to support the economy and avoid structural change."

Experts have also expressed doubts about the effectiveness of the coupons plan.

NEC to axe 15,000 worldwide jobs
Japan's biggest computer chipmaker, NEC, is to slash 15,000 jobs as it tries to turn around one of the biggest losses in its history.

The beleaguered company's fortunes have been hit by a double whammy, problems at its US subsidiary and the global collapse in the price of chips. Among the first to leave their job will be the NEC president Hisashi Kaneko, who said he would take personal responsibility for the company's 150bn ($1.25bn) loss. He leaves his post on 26 March but will stay on as an adviser with a seat on the board of directors.

Speaking about the abysmal figures, Mr Kaneko said: "With our restructuring efforts and the reshuffling of top management, we hope to create a revitalised NEC."

In its bid to tackle the deep-seated problems, NEC said it had worked out a sweeping restructuring plan, which included cuts in capital spending, the scrapping of unprofitable businesses and eliminating 15,000 jobs over three years.

NEC's dismal performance was due in a large part to a special loss of about 75bn to pay for restructuring at its Packard-Bell NEC unit, a loss-making PC-maker in the US.

NEC cut the workforce there in half to 3,000, and reduced the number of its PC models and distribution outlets, with the aim of making profits in the next business year.

The slump in Japan's domestic economy has not helped. NEC has been too slow in developing low-priced personal computers that could keep up with the industry's cut-throat price competition, but NEC said operations have been improving since management changes last year.

Mr Kaneko said the declining demand for telecommunications equipment in Japan, sagging prices of semiconductors and a stronger yen were also to blame for NEC's woes.

The industry's harsh conditions also battered Toshiba Corporation, which on Friday announced that its profits this business year would fall far short of its previous forecasts.

A strong yen makes Japanese products more expensive in overseas markets, while reducing the yen value of profits repatriated from abroad.