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[ASIA NEWS]
ASIA NEWS SEPTEMBER 1, 2009
Japan's Next Leader Targets Bureaucracy
Hatoyama Wants to Streamline Government, While Handing More Decisions to Political Appointees
By ALISON TUDOR and YUKA HAYASHI
Likely future Japanese Prime Minister Yukio Hatoyama will soon select his cabinet, which includes a new and crucial position: a top official to take on the government's bloated bureaucracy.
Mr. Hatoyama's Democratic Party of Japan says its proposed National Strategy Bureau will set budget guidelines and other policies, wresting decisions away from government functionaries and putting them in the hands of elected leaders.
Mr. Hatoyama, fresh off his party's landslide victory in weekend elections, said late Sunday that the finance and strategy bureau jobs are among his top priorities, as the party looks for ways to finance an expensive domestic spending plan in part by cutting bureaucratic positions.
He said he would likely fill the positions this month, after he officially becomes prime minister. Speculation abounds over which DPJ officials will take the strategy bureau job and other posts. Mr. Hatoyama said Sunday it was too early to talk about his cabinet lineup.
Given the party's agenda to increase spending for families and consumers, revamping the national budget to find funds is a crucial task.
DPJ Secretary-General Katsuya Okada said Monday that when government ministries submitted budgets at the end of August as scheduled for the fiscal year beginning in April, party officials immediately began scrutinizing them. For the next fiscal year alone, the DPJ must find 7.1 trillion yen, or about $76 billion, to cover its social-spending program that includes a child allowance and elimination of highway tolls.
"This is the first hurdle we have to overcome," Mr. Okada said on public broadcaster NHK.
The party is also reviewing the 14-trillion-yen supplementary budget that departing Prime Minister Taro Aso has already implemented to cover his economic-stimulus plan with an eye toward revising it by canceling some projects.
The DPJ trounced the Liberal Democratic Party in the election for the Japanese parliament's lower house, giving it broad sway to remake the government. Final voting statistics Monday showed 72 million people, or 69% of eligible voters, participated, the highest percentage since the current voting system was enacted 13 years ago.
The finance and strategy-bureau positions might be the most important for a future Hatoyama administration as it looks for ways to pay for its social-spending program, which could cost 16.8 trillion yen a year by the fiscal year beginning in 2013.
The DPJ campaigned on a promise it could pay for the package in part by cutting and shaking up Japan's ranks of powerful bureaucrats. "The ministries have too much power. They are more powerful than bureaucracies in other countries generally," said Kan Suzuki, vice chairman of DPJ's policy committee, in an interview.
Still, paring the bureaucracy could be a difficult task. "Politicians have been keen to cut back big government before," said one midranking bureaucrat in Kasumigaseki, the nexus of cabinet ministries in Tokyo. "I don't think there will be a revolution," the person added.
The DPJ, which has never held power in its 12-year existence, may need bureaucrats' institutional knowledge to get things done. "You're going to have a lot of new politicians who don't know their way from the prime minister's office to their own ministry making policy," said Gerald Curtis, professor of Japanese politics at Columbia University.
Japan is heavily regulated, with red tape damping all kinds of activity from setting up a business to parking a bicycle. DPJ politicians say an "iron triangle" has developed among bureaucrats, big business and the LDP, which is stifling innovation. To break up these relationships, the DPJ proposes to decentralize the bureaucracy and fill high-ranking civil-service posts with political appointments. The DPJ also has promised to outlaw the practice of "amakudari," meaning "descent from heaven," whereby government officials after retirement take up senior positions in the companies they oversaw.
An effort by former prime minister Junichiro Koizumi to centralize power recorded initial success but faltered when successive administrations lost interest.
"The DPJ needs to make sure they have the right expertise as quickly as possible because the expectations of Japanese citizens are high," said Paige Cottingham-Streater, deputy executive director of the Maureen and Mike Mansfield Foundation, a Washington-based policy organization focused on U.S.-Asia relations.
—Daisuke Wakabayashi contributed to this article.
[ASIA NEWS]
SEPTEMBER 1, 2009
Can DPJ Rein In Japan's Deficits?
By DITAS LOPEZ and TOMOYUKI TACHIKAWA
The Democratic Party of Japan is sounding a tough note on the country's budget deficit, but credit-rating agencies and investors are skeptical about whether the newcomers to power can curb the industrial world's worst debt binge.
The DPJ, after ousting the Liberal Democratic Party from more than half a century of almost-uninterrupted rule in Sunday's election, stuck to its promise to rein in Japan's budget deficit by cutting waste, even as it ramps up spending for populist programs such as handouts to families.
"We must make efforts to limit government-bond issuance as much as possible," said party leader Yukio Hatoyama, who is set to become prime minister. "We need to do some soul-searching about the past practice of spending freely without limit and then selling bonds if there was a budget shortfall."
The bond market showed little reaction Monday to the landslide victory, which had been widely forecast, and analysts predicted little short-term impact. But there is plenty of wariness over whether the DPJ can live up to the vague promises of its platform.
Japan's credit rating doesn't face "a very significant immediate implication" as a result of the new leadership in Tokyo, "because it will take time for that government to take off and start implementing its policy," said Takahira Ogawa, a senior analyst at Standard & Poor's.
Moody's Investors Service's position on the DPJ's fiscal program "is essentially one of wait-and-see" because there is only the party's manifesto to go by, said senior analyst Tadashi Usui.
But Moody's said "a prominent rating concern is whether the DPJ can reconcile its policy priorities with the challenges facing the economy, maintain market confidence, and thereby squarely place the economy back on a path of fiscal consolidation."
S&P rates Japan as double-A, Moody's rates the debt Aa2; both ratings have stable outlooks.
The party more than doubled its size in the Lower House of Japan's parliament, seizing 308 of the 480 seats, while the LDP withered by almost two-thirds to 119. The DPJ already rules the Upper House in a coalition and is expected to bolster its dominance in the more powerful lower chamber by allying with smaller, leftist parties.
The DPJ campaigned on a platform of people-first social services, promising to boost domestic demand by easing the financial burden on households with a child-care allowance, health-care changes and the elimination of highway tolls.
The proposals are expected to cost some seven trillion yen, or around $75 billion, in the fiscal year starting April 2010, rising to 16.8 trillion yen in the fiscal year ending March 2014.
To pay for this, the party vows to trim fat from the existing budget, reallocate money for better uses, sell state assets and tap the "buried treasure" of 4.3 trillion yen in special government accounts.
As it stands, next year's initial budget is on track to require 21.9 trillion yen to finance Japan's public debt, or about 170% of gross domestic product, the highest among industrialized nations, the Finance Ministry said Monday.
Japanese government bonds were little changed Monday. The benchmark 10-year yield was flat at 1.305%. Attention will shift Tuesday to the government's planned sale of 2.1 trillion yen ($22.44 billion) of 10-year bonds.
—Takashi Nakamichi contributed to this article.
Skepticism Greets Promises to Cut Debt; New Spending Plans
[ASIA NEWS]
ASIA NEWS SEPTEMBER 1, 2009
Japan's Next Leader Targets Bureaucracy
Hatoyama Wants to Streamline Government, While Handing More Decisions to Political Appointees
By ALISON TUDOR and YUKA HAYASHI
Likely future Japanese Prime Minister Yukio Hatoyama will soon select his cabinet, which includes a new and crucial position: a top official to take on the government's bloated bureaucracy.
Mr. Hatoyama's Democratic Party of Japan says its proposed National Strategy Bureau will set budget guidelines and other policies, wresting decisions away from government functionaries and putting them in the hands of elected leaders.
Mr. Hatoyama, fresh off his party's landslide victory in weekend elections, said late Sunday that the finance and strategy bureau jobs are among his top priorities, as the party looks for ways to finance an expensive domestic spending plan in part by cutting bureaucratic positions.
He said he would likely fill the positions this month, after he officially becomes prime minister. Speculation abounds over which DPJ officials will take the strategy bureau job and other posts. Mr. Hatoyama said Sunday it was too early to talk about his cabinet lineup.
Given the party's agenda to increase spending for families and consumers, revamping the national budget to find funds is a crucial task.
DPJ Secretary-General Katsuya Okada said Monday that when government ministries submitted budgets at the end of August as scheduled for the fiscal year beginning in April, party officials immediately began scrutinizing them. For the next fiscal year alone, the DPJ must find 7.1 trillion yen, or about $76 billion, to cover its social-spending program that includes a child allowance and elimination of highway tolls.
"This is the first hurdle we have to overcome," Mr. Okada said on public broadcaster NHK.
The party is also reviewing the 14-trillion-yen supplementary budget that departing Prime Minister Taro Aso has already implemented to cover his economic-stimulus plan with an eye toward revising it by canceling some projects.
The DPJ trounced the Liberal Democratic Party in the election for the Japanese parliament's lower house, giving it broad sway to remake the government. Final voting statistics Monday showed 72 million people, or 69% of eligible voters, participated, the highest percentage since the current voting system was enacted 13 years ago.
The finance and strategy-bureau positions might be the most important for a future Hatoyama administration as it looks for ways to pay for its social-spending program, which could cost 16.8 trillion yen a year by the fiscal year beginning in 2013.
The DPJ campaigned on a promise it could pay for the package in part by cutting and shaking up Japan's ranks of powerful bureaucrats. "The ministries have too much power. They are more powerful than bureaucracies in other countries generally," said Kan Suzuki, vice chairman of DPJ's policy committee, in an interview.
Still, paring the bureaucracy could be a difficult task. "Politicians have been keen to cut back big government before," said one midranking bureaucrat in Kasumigaseki, the nexus of cabinet ministries in Tokyo. "I don't think there will be a revolution," the person added.
The DPJ, which has never held power in its 12-year existence, may need bureaucrats' institutional knowledge to get things done. "You're going to have a lot of new politicians who don't know their way from the prime minister's office to their own ministry making policy," said Gerald Curtis, professor of Japanese politics at Columbia University.
Japan is heavily regulated, with red tape damping all kinds of activity from setting up a business to parking a bicycle. DPJ politicians say an "iron triangle" has developed among bureaucrats, big business and the LDP, which is stifling innovation. To break up these relationships, the DPJ proposes to decentralize the bureaucracy and fill high-ranking civil-service posts with political appointments. The DPJ also has promised to outlaw the practice of "amakudari," meaning "descent from heaven," whereby government officials after retirement take up senior positions in the companies they oversaw.
An effort by former prime minister Junichiro Koizumi to centralize power recorded initial success but faltered when successive administrations lost interest.
"The DPJ needs to make sure they have the right expertise as quickly as possible because the expectations of Japanese citizens are high," said Paige Cottingham-Streater, deputy executive director of the Maureen and Mike Mansfield Foundation, a Washington-based policy organization focused on U.S.-Asia relations.
—Daisuke Wakabayashi contributed to this article.
[ASIA NEWS]
SEPTEMBER 1, 2009
Can DPJ Rein In Japan's Deficits?
By DITAS LOPEZ and TOMOYUKI TACHIKAWA
The Democratic Party of Japan is sounding a tough note on the country's budget deficit, but credit-rating agencies and investors are skeptical about whether the newcomers to power can curb the industrial world's worst debt binge.
The DPJ, after ousting the Liberal Democratic Party from more than half a century of almost-uninterrupted rule in Sunday's election, stuck to its promise to rein in Japan's budget deficit by cutting waste, even as it ramps up spending for populist programs such as handouts to families.
"We must make efforts to limit government-bond issuance as much as possible," said party leader Yukio Hatoyama, who is set to become prime minister. "We need to do some soul-searching about the past practice of spending freely without limit and then selling bonds if there was a budget shortfall."
The bond market showed little reaction Monday to the landslide victory, which had been widely forecast, and analysts predicted little short-term impact. But there is plenty of wariness over whether the DPJ can live up to the vague promises of its platform.
Japan's credit rating doesn't face "a very significant immediate implication" as a result of the new leadership in Tokyo, "because it will take time for that government to take off and start implementing its policy," said Takahira Ogawa, a senior analyst at Standard & Poor's.
Moody's Investors Service's position on the DPJ's fiscal program "is essentially one of wait-and-see" because there is only the party's manifesto to go by, said senior analyst Tadashi Usui.
But Moody's said "a prominent rating concern is whether the DPJ can reconcile its policy priorities with the challenges facing the economy, maintain market confidence, and thereby squarely place the economy back on a path of fiscal consolidation."
S&P rates Japan as double-A, Moody's rates the debt Aa2; both ratings have stable outlooks.
The party more than doubled its size in the Lower House of Japan's parliament, seizing 308 of the 480 seats, while the LDP withered by almost two-thirds to 119. The DPJ already rules the Upper House in a coalition and is expected to bolster its dominance in the more powerful lower chamber by allying with smaller, leftist parties.
The DPJ campaigned on a platform of people-first social services, promising to boost domestic demand by easing the financial burden on households with a child-care allowance, health-care changes and the elimination of highway tolls.
The proposals are expected to cost some seven trillion yen, or around $75 billion, in the fiscal year starting April 2010, rising to 16.8 trillion yen in the fiscal year ending March 2014.
To pay for this, the party vows to trim fat from the existing budget, reallocate money for better uses, sell state assets and tap the "buried treasure" of 4.3 trillion yen in special government accounts.
As it stands, next year's initial budget is on track to require 21.9 trillion yen to finance Japan's public debt, or about 170% of gross domestic product, the highest among industrialized nations, the Finance Ministry said Monday.
Japanese government bonds were little changed Monday. The benchmark 10-year yield was flat at 1.305%. Attention will shift Tuesday to the government's planned sale of 2.1 trillion yen ($22.44 billion) of 10-year bonds.
—Takashi Nakamichi contributed to this article.
Skepticism Greets Promises to Cut Debt; New Spending Plans
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