In this edition of TPR News: Fukuda talks tough, but his approval ratings keep falling; Korea’s Lee visits Tokyo; tax hike; Americans buy udon because Fukudome is batting .317; more on Steel Partners; a temple is defaced in Nagano after declining to host the Olympic torch; and more.

Politics

“Please tell me who in your party I can speak to, who can be trusted.”

Prime Minister Yasuo Fukuda appeared to catch DPJ leader Ichiro Ozawa off-guard and surprised some political observers by expressing his frustration in a more assertive way than usual during their televised debate on Wednesday, April 9th.

While such debates are often formal and lacking in substance and Fukuda has been criticized for preferring old school back room horse trading to publicly hashing out disagreements and selling his policies to the public, the beginnings of change on both fronts crept up during the leaders’ first debate in three months.

After securing the DPJ’s agreement on the approval of Deputy Governor Masaaki Shirakawa, who became acting Governor immediately upon assuming the post, as Governor of the Bank of Japan, the LDP nominated Hiroshi Watanabe to fill Shirakawa’s newly vacated Deputy Governoship. The DPJ, as expected, fell in behind Ozawa and rejected Watanabe on the grounds that he had been a senior bureaucrat at the Ministry of Finance - the same reason given for rejecting three previous nominees for Governor or Deputy Governor.

Some observers viewed Fukuda’s unusually aggressive comments, attacking Ozawa’s leadership and the DPJ’s tactics of stalling in the Diet and complaining to the press, as signalling a change in tactics. While the opposition camp has publicly criticized Fukuda, his LDP, and their tactics, Fukuda has stuck to attempting to work out deals behind closed doors, the same unappealing practice televised debates between the Prime Minister and opposition leader were supposed to reduce when they were begun a few years ago.

For his part, Ozawa replied that his party’s position had been consistent: the DPJ opposes reserving a senior spot at the BOJ to cushily catch retiring MOF bureaucrats as they descend from Heaven.

Fukuda might have been on to something when he launched a direct assault on Ozawa’s leadership. The whip he and his lieutenants have been using to keep the party’s disparate members in line may be losing it’s sting. It is reported that some DPJ members had either wanted to approve Watanabe, who had foreign experience at the MOF that many think would be an asset at the BOJ, or thought the party would be wise to approve him in order to allay suspicions that they were playing politics with the string of BOJ nominations. Still others seemed to resent the DPJ’s party unity taking the form of everyone voting behind Ozawa, who made public statements sans prior consultation with his party, in order to avoid embarrassment. Tellingly, only one DPJ member dared to vote to approve Toshiro Muto, but more slipped out of the Ozawa yoke to vote for Watanabe and still others simply absented themselves from the vote.

Fukuda’s assertive new stance, if that’s what it is, is not helping in the public eye yet, though. The Prime Minister’s approval ratings continue to tumble as his tussles with the DPJ, and opponents of reform within his own party, continue.

The latest Asahi Shimbun poll shows Fukuda’s approval rating dropping to Abe nadir territory, at 25%, with the disapproval climbing to 60%, as the latest Nikkei poll shows the Cabinet’s approval rating at a record low 29%, as disapproval ratings reach a record high 59%. These are the worst numbers for the Cabinet in post-7/29 polls.
62% of respondents cited lack of leadership as the reason for their disaproval, followed by 44% who disapproved of the Cabinet’s policies. The low numbers show a significant drop in support among respondents over 60 years old, which probably reflects the troubled start of premium collections for a new health insurance scheme for the elderly.

As expected, the Prime Minister’s proposal to remove gas tax revenues from a fund earmarked for road construction and place them in the general fund gained support from his supporters as well as his detractors and supporters of the DPJ, which had asked for a similar move, coming in at 46% in favor.

Of those who supported the Fukuda Cabinet, 46% did so because they thought he was trustworthy, followed by 35% who supported the Cabinet because it was an LDP Government.

Support for the LDP is still higher, at 38%, than for the DPJ, 29%, but the gap is narrowing.

Although frustrated in an earlier attempt, those who hope to reform the venal, corrupt system of amakudari that still has a grip on some, if not most, of Japan’s Ministries have introduced another bill to that end. Unable to keep bureaucrats and politicians apart, and unable to get independent oversight of post-retirement appointments for senior bureaucrats, the would-be reformers are now focusing on some of the agencies to which retiring bureaucrats descend.

If passed, the bill would require directors, auditors, and senior positions at the 101 most corrupt and wasteful independent administrative agencies to be sought with greater oversight from the Cabinet and to open such job opportunities up to members of the public. Moreover, such agencies will be prohibited from sending their retired officials to private companies with which they have business ties.

Critics of the bill point out that the Cabinet has a habit of skimming over such recommendations and appointments and doubt it will eradicate or even seriously diminish the practice of amakudari.

In foreign affairs, new South Korean President Lee Myung Bak began his two-day visit to Tokyo on Sunday, marking the resumption of “shuttle diplomacy,” or frequent visits between Japan and South Korea by the two countries’ respective leaders.

Lee, a former business leader who has backed away from predecessor Roh Moo Hyun’s Sunshine Policy and history-related standoff with Japan and has sought closer ties with the US as well as Japan, has said he wanted to take a pragmatic approach to foreign policy, declining to seek apologies from Japan over historical issues in the hope of improving the economic relationship with his country’s wealthy neighbor and of presenting a united front with Japan and the US against North Korea.

As a sign of his business wishes, Lee brought an entourage of Korean business leaders with him, who were set to meet with their Japanese counterparts as Lee met with his on Monday.

Business and the Economy

People around the world are familiar with ramen, or as the flash-fried, buillon-accompanied variety are known in the States “ramen noodles” (often pronounced “ray-men”), but it appears thicker, heartier, more truly Japanese udon is making inroads as well.

Osaka Customs reported that 12,500 tons of udon, soba, and somen were exported in 2007, up 24.8% on 2006. 40% of Kansai noodle exports were udon, possibly because of the close proximity of Kagawa, which is well-known for its udon. 40% of the noodle exports were to the US, where according to a spokesman from frozen udon manufacturer Katokichi Co., the success of Japanese baseball players in the Major Leagues has sparked an increased interest in Japanese food. (The Yomiuri Shimbun takes that unsubstantiated and highly dubious claim as part of its leader on the story. I suppose, though, that could explain the presence of Dominican restaurants on every corner in the US. Yes, that’s facetious.) More believably, other manufacturers point to increased marketing, the promotion of Sanuki udon as a brand, and a preference among consumers for Japanese-made Japanese noodles as reasons for the doubling of udon exports over the past decade.

On Friday, the Ministry of Finance presented a plan to expedite the transfer of power from the central government and local governments to a fiscal and structural reform panel of the Fiscal System Council, an advisory body to the finance minister.

Among the Ministry’s proposed measures to ensure the expansion of local government’s resources was a recommendation for an increase in the consumption tax. The Ministry also recommended changing the distribution of tax revenue, currently 60/40 in favor of the central government, to a 50/50 split between the central government and local governments. The special local corporate tax, in place for only a few months, will also need to be raised.

It is hoped that these measures will allow local governments to maintain operations and services with less reliance on tax revenue grants from the central government.

According to the Ministry of Internal Affairs and Communications, the number of households using fiber optic Internet connections has exceeded the number of those using ADSL lines for the first time. According to the report, 31.3% of Internet-connected households in the nation are using fiber optic connections, with the rate in Tokyo standing at 80.8%.

As of this month, about 8.32 pensioners are having increased health insurance premiums deducted from their pension payments. Although the Ministry of Health, Labor and Welfare has said that the burden would be lower for those pensioners who receive less money, municipal government offices have received a flood of complaints and inquiries from pensioners. One angry 79 year-old woman was quoted in the Yomiuri as saying, “I’m not even receiving all the money I should be in the first place…They can get away with making a mess of handling the system and then just take money off us without asking for a word of permission.”

Spending on services fell in February, according to the Ministry of Economy, Trade and Industry. Overall spending fell 1.7% from January, as consumers remained worried about rising prices and stagnant wages. Data showed spending on real estate fell 4.8%, financial and insurance products was down 3.6%, and retail and wholesale spending was down 1.0%.

Last week, however, data from the Cabinet Office showed Japan’s consumer confidence level rising slightly in February. After having dropped to nearly five-year lows in February, the consumer confidence index increased 0.6 points to hit 36.7 in March, which is still below the score of 37.5 registered in January. According to the report, 85.7 percent of consumers surveyed believed that prices would rise over the coming year.

On the other hand, real estate firms are not happy with the way 2007 turned out. In the metropolitan Tokyo area, new condo sales were down 17.9% as prices rose 9.3%. In central Tokyo, prices shot up 16% as higher land and construction costs combined to push up retail prices. Nationwide, land prices rose 1.7% in 2007. According to Teikoku Databank, about 26.9% of Japan’s bankruptcies in 2007 were made up of firms involved in the construction industry.

Finally, US hedge fund Steel Partners has sold its stake in both Bull-Dog Sauce and Kikkoman, after a protracted attempt to take over Bull-Dog ultimately failed. Japan’s supreme Court ruled that the shareholders of Bull-Dog Sauce were acting legally when they voted to dilute Steel’s equity in the firm, despite the fact that the law calls for equal treatment of shareholders. Steel Partners leaves Bull-Dog having generated at least 2 billion yen in profits from selling its share warrants back to the firm, and is also estimated to have earned 2 billion yen from selling its share in Kikkoman.

Society

Zenkoji temple, originally designated as the start of Japan’s leg of the Olympic torch relay, had recently declined to participate after security concerns were revealed during the torch’s journey through other parts of the world. Anti-China protests have dogged the relay and caused several changes to the planned route of the time-honored relay.

Perhaps in retaliation for its decision, the 1,400 year-old Buddhist temple was vandalized with spray paint on Sunday morning. The temple commented that it has received some 100 calls a day either in support or in protest of its unwillingness to serve as a site of possible politically-charged demonstrations, and police have yet to determine whether or not the graffiti was indeed connected to the temple’s decision to withdraw its participation in the torch relay.

The law establishing the lay judge system will go into effect on May 21, 2009, exactly five years after it was enacted. The system will team six jurists with three judges to determine guilt or innocence in cases involving serious offenses such as murder. The law will apply to crimes committed after the law goes into effect, so the first cases involving citizen jurists will likely not take place until later in the summer of 2009. One of the main concerns at this point is making sure that the public understands the path of reforms that the judicial system has embarked upon.

There seems to be agreement that the new lay judge system will cause many new headaches in the short-term, but that long-term benefits will make the transition worthwhile. One such headache that authorities are currently working on a solution for is the question of under what circumstances, job-related or otherwise, can a person opt out of jury duty.

Shizuoka Prefecture’s city of Iwata has decided to cut some slack to the municipality’s unregistered international schools that are largely attended by Brazilian youths. The schools are now allowed to use public facilities, such as gymnasiums, at a reduced cost. Subsidized rates are usually only allowed for registered educational institutions. The central government tends to see such international schools as resembling “private cram schools.” According to the Yomiuri newspaper, there are four Brazilian schools located within the city and around 500 students attend them. Four percent of the Iwata’s population is Brazilian. The drop in fees for use of public facilities should save the schools tens of thousands of yen each year.

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