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Japan Delays Release of Bad Bank Debt Plan - 2002-10-25

The Japanese government has postponed the release of a much-awaited outline of banking industry reform, which is seen as vital to clearing a mountain of bad loans. The delay is due to feuding between powerful senior politicians and Heizo Takenaka, the cabinet minister who oversees banks and economic reform.

The Japanese news media report that Mr. Takenaka is pushing new guidelines on how banks define bad loans. This would make it easier for the government to assess the size of the loan problem, and to know whether public funds are needed to keep lenders from failing. Some key Liberal Democratic Party politicians, however, worry that the plan could push banks and other businesses into bankruptcy.

Mr. Takenaka says that the prime minister told him to follow his reform policy, and the cabinet minister says he will stick to his tough original plan.

By some estimates, Japanese banks are carrying about $33 billion in non-performing loans on their books - equal to about 8 percent of the nation's gross domestic product. The government now says a broader economic revitalization package will be released later this month.

In the auto industry, Nissan Motor has pulled off another record performance for the first half of the fiscal year. The company expects to report that its net profit will rise 24 percent from the previous year, to $2.3 billion. That is the fifth consecutive half of record numbers for the once troubled automaker.

Nissan, Japan's number three car manufacturer, attributes its vigorous performance to brisk sales of new vehicles and cost-cutting efforts. Nissan says its goal is to boost sales by an additional one million vehicles three years from now, and to launch about 30 new models in that time.

In other news, Sharp, Japan's largest crystal display maker, has unveiled new technology that will allow it to develop ultra thin touch-screen computers. Sharp announced that it has succeeded in placing an eight-bit central processing unit on a piece of glass. The company says this is a revolutionary breakthrough, and could lead to new interactive devices the size of a business card and as thin as one millimeter.