IT the key to Japan's economic reforms

To reverse the downward spiral, the Japanese government has to solve the non-performing loans problem, allow more market competition and refrain from taking too much action in the economy.

Takenaka predicted that this will result in marginal economic growth at best over the next two or three years.

"We'll see some pain--unemployment will rise," The Business Times reported Takenaka telling the Singapore Press Club in a talk. "But if we don't pursue reform, the total pain afterwards will be amazingly high."

During his visit here, which ends today, Takenaka met Prime Minister Goh Chok Tong, and discussed how to make the PM's vision of an Asian IT Belt--linking major IT capitals in the region, including Kuala Lumpur, Seoul and Tokyo--come true.

As a first step, Singapore and Japan are planning to co-host an Asian IT Summit, where regional leaders will discuss IT cooperation.