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Japan: Reality starts to set
in
By Hussain Khan
TOKYO -
Prime Minister Junichiro Koizumi is already starting to
run into trouble from the press and opposition parties.
After having been decisively re-elected head of Japan's
once nearly moribund Liberal Democratic Party (LDP),
appointing what most observers view as a strong new
cabinet, misgivings have begun to arise.
Members
of the press and the opposition have begun to have
misgivings regarding the changes as nothing more than
pious wishes in view of two-and-a-half years of
lackluster performance.
Naoto Kan, president of
the Democratic Party of Japan (DPJ), harshly criticized
the lack of visible results of the structural reforms
pursued by Koizumi in a question-and-answer session at
the extraordinary Diet (parliamentary) session that
followed the premier's policy speech.
Kan
pressed Koizumi to clarify his party's policies in the
LDP manifesto, as Koizumi is assumed to be planning to
dissolve the Lower House on October 10 and hold a
general election on November 9. The DPJ was enlarged on
Friday to 204 lawmakers by officially merging with the
Liberal Party. Regarding the ongoing Diet session as the
start of a campaign for the upcoming election, the party
is set to stage showdowns at every opportunity.
A draft of the DPJ's party manifesto includes a
call for a thorough review of government expenditures,
focusing on a sharp cut in public works, its own plan to
overhaul the pension system and a proposal to abolish
tolls for expressways, among other issues. Comparing
these goals and Koizumi's reform agenda, Kan slammed the
government's economic and fiscal policies. Referring to
the privatization of the postal service, which Koizumi
has long advocated, Kan pointed out the strong
opposition within Koizumi's own LDP, questioning the
feasibility of the idea.
Commenting on Koizumi's
policies, Nihon Keizai Shimbun wrote, "If Koizumi aims
to use that capital [cabinet talent] effectively, he
needs to provide more details of his reform plans, which
remain vague, especially when the Democratic Party of
Japan, the biggest opposition party, is working out more
concrete reform programs ahead of Lower House elections
expected in November. The premier, for instance, has
promised the privatization of four public road operators
in fiscal 2005. But few specifics of the privatization
process have emerged as the Land, Infrastructure and
Transport Ministry continues to fight a rear-guard
action.
"Meanwhile, the DPJ has announced a
drastic plan to scrap the Japan Highway Public Corp, the
largest of the four entities, and use the highway budget
to pay down their massive debts. Much the same holds
true when it comes to privatizing the postal services,
now penciled in for fiscal 2007. The government has yet
to start debating the controversial issues needed to be
sorted out. Unless the work gets under way quickly,
meeting the fiscal 2007 deadline will become a tall
order."
Koizumi is also being criticized for
failing to give the public a clear idea of what he
intends to achieve in the spending, regulatory,
financial and tax reforms he and his ministers have been
discussing. Under the influence of Finance Minister
Sadakazu Takenaka, he has practically cut spending on
public-works projects for two years in a row. In this
respect, the proposals of the DPJ, including the
termination of public-works projects of dubious worth,
are seen as more specific and convincing by a section of
the Japanese press.
Moreover, in respect of
deregulation, pension reform, fiscal rehabilitation and
agricultural reform, no proposals for worthwhile
progress have appeared before the public. Agricultural
reforms are especially closely linked to the continuing
talks under the World Trade Organization. In all cases,
reform efforts are seen to have been frustrated by
vested interests. Even though it is early days, Koizumi
is thus being urged to come forward with concrete plans
capable of attracting voters to the polls.
A
decisive victory in the Lower House elections would give
him the political and moral authority to overcome the
resistance within his own party and move forward to
successfully implementing his proposed structural reform
program.
Asia Times Online carried exhaustive
coverage of four of Koizumi's top economic planners on
October 1 (Koizumi's powerful economic
lineup). A deeper look at some of his other
cabinet appointments reveals a certain amount of fealty
paid to factional Japanese politics despite widespread
belief that the new cabinet would break with tradition.
Industrial revitalization
Kazuyoshi
Kaneko, for instance, is state minister in charge of
industrial revitalization and administrative reform. A
member of the LDP faction led by Mitsuo Horiuchi, the
party's general council chairman, Kaneko, 60, is serving
his fifth term in the Lower House. The eldest son of
former finance minister Ippei Kaneko, he is a banker who
served in London for four years in the Long-Term Credit
Bank of Japan, which notoriously sank and became the
first major Japanese financial institution to be taken
over by multinational interests. He is known primarily
as a financial expert. He has established working ties
with opposition lawmakers through his work as deputy
chairman of the LDP Diet Affairs Committee.
In
interviews, Kaneko does say he will push forward to
divide Japan's massive highway bureaucracy into four
highway-related public corporations, although he backs
away from replacing Haruho Fujii, the president of Japan
Highway Public Corp.
Asked whether it is
desirable to divide the four highway-related public
corporations, he said the details are still to be
discussed. He continues to back the concept of
privatization. He said he would promote deregulation
from the standpoint of consumer convenience. Regional
regulatory reforms are advancing rapidly, while
government ministries and agencies stand around
quarreling over who has jurisdiction.
Regarding
negotiations with government-affiliated institutions
concerning loan forgiveness for companies that receive
restructuring assistance from the Industrial
Revitalization Corp of Japan (IRCJ), he said the
Development Bank of Japan has already agreed to
cooperate in forgiving loan claims. In regard to the
rehabilitation of Kyushu Industrial Transportation Co,
his ministry is negotiating with the Ministry of Land,
Infrastructure and Transport and the Ministry of Finance
concerning the role the Organization for Promoting Urban
Development should play.
Postal
privatization
Taro Aso, 63, has been appointed
minister of public management, home affairs, posts and
telecommunications. He belongs to a conservative LDP
faction led by Yohei Kono and is a grandson of the late
prime minister Shigeru Yoshida. Despite his elite
political background, he sometimes speaks crudely and
has committed several verbal gaffes in the past. A
seven-time member of the Lower House from Fukuoka, he
was Koizumi's previous LDP policy-affairs chief.
Like Kamei, he is a staunch believer in the need
to prop up the sagging economy first and to achieve
fiscal reform later. In this respect, he has repeatedly
clashed with the Finance Ministry and remains solidly in
the anti-Takenaka group within the LDP. Despite his
differences with Koizumi on the economic-policy front,
there was never any decisive split between the two
lawmakers, however.
Koizumi himself told the
press he will seek legislative approval to privatize
Japan Post, the nation's behemoth savings institution,
in 2005. While he said the institution will be
privatized, he added cautiously that he would first have
to see what changes would be wrought through the
privatization. It is difficult to push for privatization
without predicting specific changes, such as lower
postal rates and better services, he said.
On
whether the LDP will fight the general election with
privatization as a campaign pledge, he said the details
are yet to be worked out. It is better not to talk about
it, he said, because it may ignite concerns in rural
areas and create rumors that the post offices there will
go under.
But Koizumi underscored his commitment
to postal privatization, which is touted as his pet
project although it faces stiff opposition from LDP
lawmakers with strong ties to the postal operations. In
response to a question by DPJ leader Naoto Kan at a
Lower House plenary session, Koizumi said he will do his
best to ensure that the privatization of the three
postal services will be incorporated into the LDP policy
platform to be released prior to the upcoming general
elections.
"Whether we will be able to realize
the privatization will serve as the acid test for the
LDP's attempt to transform itself into a party of
reform," Koizumi said. He warned, "Party members who
have been opposed to the privatization should act
responsibly in the upcoming election," indicating that
he will not allow LDP lawmakers to speak out against the
postal-privatization plan.
As for a specific
method for privatization, Koizumi said the Council on
Economic and Fiscal Policy will discuss the matter, and
pertinent legislation will be submitted to the Diet in
2005.
Health, labor and
welfare
Chikara Sakaguchi, 69, minister of
health, labor and welfare policies, remains from the
previous cabinet. He is from the New Komeito Party,
which shares power in the LDP coalition. Sakaguchi has
become the longest-serving health minister in postwar
Japan. He was appointed in the second cabinet of prime
minister Yoshiro Mori in December 2000. He is a
qualified medical doctor and, having previously served
as policy chief of New Komeito, is well versed in
overall policy affairs.
Amid Japan's rapidly
aging society and its shrinking working population,
Sakaguchi faces numerous challenges in pushing ahead
with a public-pension reform plan. In an interview with
the Nihon Keizai Shimbun, he said it is difficult to cut
medical treatment fees paid under the public
health-insurance program. Regarding the timing and
funding for raising the government's share of
contributions to the basic public-pension programs, he
said it is to be raised from one-third at present to
one-half next year under the law, but implementation
could be affected by the political schedule including
the anticipated dissolution of the Lower House.
Sakaguchi wants to raise the government's share
in stages, saying it would be best to carry out the
increase at one time by securing the necessary funds,
but if that cannot be done, the second choice would be
to raise it in stages after preparing a plan.
As
for a deflation link on pension benefits in compiling
next fiscal year's budget, he said the benefits for the
current fiscal year have already been made to reflect
price declines in the past year. His ministry wants to
settle the matter for the next fiscal year by deciding
how to have the benefits reflect price trends during one
year, rather than taking into account price declines
over multiple years. He said the question of how to have
the benefits reflect price declines in the past year
will have to be considered when revising the pension
premium rates.
Regarding the revision of
treatment fees paid to medical institutions under the
public health insurance program, he said: "The number of
pediatricians and obstetricians has decreased with the
declining birthrate. We must take measures to persuade
more doctors to work in these medical fields. The
medical-treatment fees are determined based on how price
declines affect medical services.
"We have the
fees reflect not only the general price trend but also
the price movements for drugs and medical equipment, I
don't think the prices have fallen so much." He said a
negative revision, which the Ministry of Finance is
demanding, will be difficult.
(Copyright 2003
Asia Times Online Co, Ltd. All rights reserved. Please
contact content@atimes.com for
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