JPRS ID: 8689 JAPAN REPORT

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• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000100090048-9
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• Content Type: REPORTS

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H'OR OFFICIA[. US~: ONLY
JPRS ~L/8689
28 September 1979
~ .~a an Re ort ~
_ p p -
CFOUO 28/79)
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t)1: c)l~ l~ 1 C' II~.L U:;I~; nNLY
JPR5 L/8689
28 SeptemLer 1�79
JAPAN REPORT
(FOUO 28/79)
CONTENTS PAGE
POJ,ITICAL AND SOr,IOI,OGICAL
JCP ~~Iembers Denounce Dissolution of Diet
(JPS, 8 Sep 79) 1
Expert Views Aim of Ohira-Called General Electicn r
(Takehiko Takahashi; MAPiICHI DAILY NEW'S, 5 Sep 79) 2
LDP Cand:idates Use U.S. r~ethod To Raise F7.inds
( Kimoei Shiba; ASAFiI ~,VENING NEt~iS, 5 Sep 79 ) . . . . . . . , . . 5
Briefs
~ Ohira's PRC Visit Prepara~cions. _ 7
ECGiv ONI C
'YOMIURI' Cr�ii~.ical oi' Cou-~cil's Report on Lon~;-Ran~c Enr;r~,y
Prospects
(Eaitorial; THE DAILi' YOMIURI, 2 Sep 79) ~
~ Japan Indus-~rial Investmer~~s May Rise 13 Percent in Fiscal 1979
(MAINICHI DAIZY NE"wIS, 5 Sep 79) 10
Ambitious 5-Year Ofishore Oil Program Movin;; Ahead
(MAIPIICHI DAII,Y NEWS, 8 Sep 79) ..........o............ 12
MITI Giving i1p on Independen~s `'or Acquiring ~rude -
(George Murakami; .ASAHI EVE~IIN~ NEw~, 5 Sep 79) 14
Sale of To~, Oil to S'nov~a Oil ~;~plained
(George Mur~,ka~r~i; ASAHI E'VEi~ING NEWS, 29 Aug 79) 16
Retired MITI Ofiic~a]_s Snapped Up by Steel Industry
(Yasushi H~.ra; ASAHI EVENING NEirJS, 13 Aug 79) 18
Briefs
Yen Credit to Me~co 19
- a - [III - ASIA - 111 FOUO] ~
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POLITICAL AND SOCIOLOGTCAL
,
JCP MEMBERS DENOU1iCE DISSOLUTION OF DIET
Tokyo JPS in English 0920 GMT 8 Sep 79 OW
~
[Text] Tokyo, Sep 8, JPS--The Liberal Democratic Party-Ohira cabinet on
September 7 enforced the dissolution of the Diet with its own partisan
interests and in collusion with the Socialist, Komei and Democratic Social- r
_ ist parties. The 35th general election thus was decided to be proclaimed -
on September 17 and the voting on October 7.
The ~ocialist, Komei and Democratic Socialist parties on September 7 pre-
sented a non-confidence motion in the lower house plenary session, thus
helping the dissolution of the Diet by the LDP. The Cotnmunist Party argued
that although the Ohira cabinet is not worthy of confidence, but the presen-
tation of non-confidence motion to the Diet at this state is nothing but
to lend a hand to such LDP maneuver, to arbitrarily dissolve the Diet without
holding deliberation on bills relating to people's urgent needs. The Com-
- ~ -munist ~'arty thu~ severely criticized such moves and did not join in pre-
senting the motion.
The JCP Dietmembers' (?group) on the same day held a general meeting and ~
was resolved to win a victory of the party in the general election. Presid- _
iurn Chairman Kanji Miyamoto said, "Let us put an end to the mal-administra-
tion of the LDP and achieve well ~ne big task to establish new Japan in the
198U's".
Miyamoto called on the Dietmembers to "do their best to defeat the LDP and
at the same time defeat the anti-communist parties which have lent a hand
to the LDP even at the final stage of the Diet, and concentrate severe
criticism on all these parties. Let us win a victory of the JCP, a genuine
progressive party". ~
On behalf of the incumbent JCP Dietmembers, Secretariat Chief Tetsuzo Fuwa
also expressed his determination, saying "we shall meet here again as a
winner". 131 JCP candidates for the general election on the same da~ in
front of major station bills throughout the country and took to the street
for campaign. [Sentence as received] They denounced the "collusive disso-
lution of the Diet" and appealed to the people to give support to the JCP
for its victory.
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~ P~I.11'1CAL AND SOCTOLOCICAL
, EXPERT VIEWS AIM OF OHIRA-CALLED GENERAL ELECTION
Tokyo ~tAINICHI DAILY NEWS in English 5 Sep 79 p 4 OW
["Nagatocho Doings" column, by Takehiko Takahashi, adviser to the MAINICHI
newspapers and former chief editorial writer: "An Increase of the Ohira _
r'action Is the Aim of the General Election"]
[Text] Prime Minister Masayoshi Ohira has finally succeeded in making a _
dissolutio~n of the House of Representatives and a general election "definite." ~
Why has Prime Minister Ohira decidad to carry out a Diet dissolution this
' autumn? There may be high-level political reason for this. On the other
hand, the reasons lying in a low dimension cannot be ignored.
The most important political problem facing Prime Minister Ohira is to be
reelected as president of the Liberal-Democratic Party in next year's
party election. Because of this, he believes ir necessary to increase the
number of pro-Ohira party members and Diet members.
Most party members belong to associations supporting Diet members. Accord-
i.ngly, to increase the number of pro-Ohira Diet members wi11 have the same
meaning as increasing the number of party members supporting Ohira.
In order to increase the number of pro-Ohira Diet members, it is essential
to increase the number of formally recognized candidates attached to the
Ohira faction and to give them sufficient financial support, For this
purpose, the party's secretary general, who belongs to the Ohira faction,
must take command of the general election.
At the time when Ohira became the LDP president, confusion rose within the
~ party over the secretary general's post. The newspapers reported that a1-
- though President Ohira had at first conside,red Zenko Suzuki for the post,
the Fukuda faction and others raised objections and Ohira suddenly switched
to Kunikichi Saito.
Nevertheless, at a meQting recently of the party's reform headquarters,
0}iira declared, "I had thought of Saito as the secretary general from the
a beginning. It was not a temporary move." .
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The Truth -
~ It is bPlieved that this statement by Ohira is the truth. This is supported
- by the Ohira faction's report on political funds that was made public re-
- cently. From about July last year, a considerable amount of money was dis-
' bursed by the Ohira faction in preparation for the party presidential
= election. Tn most cases, Saito was the recipient of this money. This means
that the pres~nt Secretary General Saito was a man whom Ohira trusted the
most in the handling of the money.
The Ohira-Saito combination had already been formed at that time.
The term of office of the secretary general and other party officers is
one year. When December comes, if the secretary general is aga~n from the
Oh:ira faction, the rise of anti-Ohira feeling within the party will became
inevitable. It might be n?r.�~ssary to give t~.p the selection of the secre-
tary general from the Ohira fa `i_on.
Under such circumstances, it is essential for the general election to be
held while Secretary General Saito still retains his post. If that is done,
. i.t will be possible to carry out drastic mea~ures to in order to increase
pro-Ohira strength.
This strategy of Prime Minister Ohira and Secretary General Saito of the
Ohira faction is being strongly opposed by the Fukuda, Miki and Nakasone
faccions.
On August 23, Takeo Fukuda, Taiceo Miki and Yasuhiro Nakasone met, The _
_ biggest problem taken up during the talk was the Ohira faction's strong _
attitude toward the forthcoming general election. _
This concerns, first of all, the problem of those informally decided as
- party-recognized candi.dates. It is the artempt of the Ohira faction to
eliminate those newly seeking to become candidates from the anti-mainstream
factions in favor of those filling candidacies from the Ohira faction.
- Di.fference -
In an election, there is a big difference between candidates formally recog- ~
n.ized by the party and those who are not. If formally recognized, financial _
- help will be forthcoming from the party and they can be assisted directly -
in local regions by Diet menbers belonging to the LDP, ~n addition, in- -
fliaential LDP politicians will go to the aid of formally recognized candi-
dates.
~ There will be none of this kind of support for a candidate who is not form-
ally recognized by the party and who runs as an independent conservative.
Accordingly, there are some who may give up their candidacy just because
they fail to be formally recognized. This is what the Ohira faction is
_ aiming at in order to achieve "success zn strategy."
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T}ic: distribut~on of influence among LDP factions in the House of Represen-
- tativc is: l~tikuda Fact~on 52, Tanaka faction 42, Nakasone fr~ction 42,
~)liira facrion 35 ancl Miki faction 34.
'1'he Ohira faction is seeking to expand its Diet seats to 50 at one stroke
in the forthcoming general election. When the Tanaka faction, median
factions and nonfaction Diet members are added, Ohira's reelection in the
next party presidential election wi11 be assured.
, Prime Minister Ohira's plan is advancing steadily. At the same time, this
strong attitude of the Ohira faction also carries the danger of resulting
in a"split election" that will prove to be a minus factor. There is a
possibility that this will also affect the post-election political situation.
COPYRIGHT: Mainichi Daily News, 1979
CSO: 4120
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POi.ITICAL AND SOCIOLOGICAL _
~
I.UP CANDIDATES USE U.S. METHOD TO RAISE FUNDS -
'Tokyo ASAHI EVENING NEWS in English 5 Sep 79 p 3
[THE NATION column by Kimpei Shiba: "Japan: Today and Yesterday"]
- [ 1'ex t] The way the Liberal-Demo- of which were conservative.
cratic Party conducts it, the The former was finaaced by
new method of collecting elec- the Mitsui �zaibatsu and the
tion funds, which is patterned latter by the Mitsubishi, which
after that in the United were the two main big busi-
States, is worse than the old ness corporations.
system whose faults the new After World War II, the
system was meant to correct. zaibatsu and the political par-
'Chis is because LDP poli- ties were dissolved, and a
ticians have put a pet:uliarly multiparty system was inaugu-
~ Japanese, twist to the Ameri- rat~d. There was a stat~ of
can fund-raising arrangement confusion for a time, but
of holding luncheons and din- things settled down in 1955
ners and having . guests fork when the two Socialist parties
_ out say ~SO for a� meal that joined to become the Japan _
might cc~t only S5, the re- SociAlist Party, and the two
mainder uf the money being conservative parties united to
contrib~ted to the candidates' ~e Liberal-Democratic
electi~~n fund. Party.
The So~ialiets and th~ Com-
- 'The Japanese were com- ~~u ~~~xuRed ~he left-
pelled to ~dopt this practice ~~g' ~arties, and ~ the LDP
following passage of the Poli- became che representative of
tical Fund Control Law which ~e conservative forces.
set a ceiling of ~if150 million 'I'he LDP oMgined finencial
= a year on the political con- S~ppo~ from big business, but
tributions any of the nation's With the dissolution of the
biggest corporations could zaibatsu, their fuads came
make.. � rrom scores of large compa-
The law became necessary nies, not from the two giants. -
to put the overly cozy r~la- Bribery and corruption be-
_ uons between Tory politicians came' so' rife that after the
and big business under res- Lockheed scandal it was nec-
traint. essary to curb the shameless
7"o understand the signific- manner in which the LDP col-
ance of what is happening, it lected political contributions
is necessary to ezplain what f?�om big business, and in re-
the situation was in former turn took care of the contri-
times. butors, by giving them prefer-
Before World War II, the ential trentment.
Japanese counterparts of the The Opposition parties ob-
American Democratic and Re- tained their votes in a differ-
publican parties were the Sei- ent way. The Communists and
yukai and the Minseito, both Socialists were backed by
workers and intellectuals; the
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~ l~t)IZ (ll~ I~ I C I/1f, IISI? ONI,Y
Komeito (Clean Government only thing these officials fcar
Purty) obtained its votes from are members of the Diet, who
the Soka Gakkai religious or- can make life miserable for
ganization of which it was an them. ,
offshoot; and the Minshato A bureaucrat nearing retire-
(the llemocratic Socialist Par- ment who occupies a high po-
ty) from the moderate labor sition and is in line for a"drs-
unions and other middle-of- cent from Heaven," that ie,
the-roaders. obtaining a lush job in a semi-
~ As already noted, the Politi- governmental organization,
cal Fund Control Law was could lose that chance if LDP
meant to limit contributions Diet members set their minds
from big business. . Thc LDP on blackballing him.
decided to get around this by So these top bureaucrats
adopting the American fund- look askance . as LDP candi-
raising method by adding, as dates force low-level bureau-
1 noted, a peculiar Japanese, crats to get the construction
twist. companies to buy .batches of
This i~ because there is a from 20 to a 100 campaign
huge diFference between the raising luncheon and dinner
LllP, on the one hand, and tickets which cost from ~20,-
the Democratic and Repub- 000 to ~f30,000 each. The
lican parties in America, on companies c~?.pend on the
2he other. The LDP depends bureaucrats Lor their contracts
on contcibutions from big and dare not refuse.
business whose interests over- An LDP candidate is able
ride those of the people. The to raise between ~20 and ~90
llemocrat~ and Republicans, million in this rr~anner.
on the other hand, depend on Japanese bureaucrats have
votes from the people, whose an enviable reputation for
interests are more important honesty. What effect having to
than those of big business. compel greedy private con-
Whereas in America there struction companies to hand
is nothing unusua! in people out what amounts to bribes to
staging a party for the politi- the politicians will have is
cal parties to raise campaign frightful to'conjecture.
funds, in Japan the pracdce of ~s already noted, an LDP
the LDP was to give parties candidate wi11 be able to raise
Eor the voters, not vice versa. ' between ai'20 and ~f90 million
So 3 sttocking thing is ha~- at fund-raising parties. He will
pening. receive an additional ~7 mil-
According io accusations lion from the LDP and may
made by political commenta- obtain 3f10 million from other
tors, money for the fund-rais- sources.
ing eampaigns is being �ex- 7'he minimum an incum-
tracted from thousands of bent LDP candidate needs to
medium and small construction be elected is ~40 million. The
coinpanies which engage in average amount is ~f100 mil-
road and other public con- lion. A newcomer has to spend
ctruction activ;ties. This is at least ,~200 million to be,~
dane, investigators say, in this elected.
rnundabout m'anner: ~ It is expected that the LDP
'I'he construction companies will run between 300 and 350
depend for their contracts on candidates and will increase
bureau and section chiefs in its present 250-bdd seats by
government ministries. The between 10 and 20 at the ex-
peRSe of the Opposition parties.
Cl)1'YRIGIiT: Asahi Evening News, 1979
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' POI,~CI'ICAL AND SOCIOLOGICAI,
BRIEFS
OHIRA'S PRC VISIT PREPARATIONS--The Japanese Government is planning to send
" a fact~finding delegation to China--this month if possible--to promote
- economic cooperation projects, a Foreign Ministry source disclosed on
- ~ 3 September. This disclosure came after Prime Minister Ohira, during his
meeting with PRC Vice Premier Gu Mu th~ same day, made a positive response
to a PRC request for yen loans. The Japanese delegation's mission is be-
lieved to be to pave the way toward realizing Prime Minister Ohira's visit
to China by the end of this year. The delegation is expected to be made
up oF officials from the foreign, international trade and industry, trans-
portation and other ministries concerned, as well as staff inembers of
government-related organizations such as Kokusai Kyoryoku Jigyodan. It
can be said that the sending of the delegation at this time indicates that
the government has started to seriously tackle problems concerning economic
cooperation with China. The same source also disclosed that Japan wants
tu conclude a cultural agreement and a science-technology cooperation agree-
ment with Chir.a during the prime minister's visit. [Text] [Tokyo MAINICHT
SH L~1BiN in Japanese 4 Sep 79 Morning Edition p 1 OW)
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1'sCONOMIC
s
'YOMIURI' CRITICAL OF COUNCIL'S REPORT ON LONG-RANGE ENERGY PROSPECTS
Tokyo THE DAILY YOMIURI.in English 2 Sep 7S p 2 OW
[Editorial: "Makeshift Energy Policy"]
.
[TextJ The Comprehensive Energy Council's interim report on the nation's
long-range energy prospects fails to convince us as being realistic.
The report is merely warmed-over stew. It's a rehash of the preliminary
seven-year economic projections prepared in 1977, which served as the
basis fcr setting oil import targets at the Tokyo summit.
Once upon a time, in the good old days when we were assured plentiful sup-
plies of oil, it was possible to fix the economic growth rate and then
calculate how much energy was needed to attain the set target, Tt wasn't
a f.oolproof formula, but it somehow worked.
iae now discover that the Comprehensive Energy Council, an advisory organ
to the International txade and industry minister, is still using this
arcliaic method in working out its latest estimates wnen we are not even
assured of stable supplies of oil. It's placing the cart before the horse
to figure out energy demand when there may be no supply at a11.
Juggling the Books
It's reported that members of the council stretched the estimates of energy
supply in order to balance it with demand so as to attain a 5.7 percent
growth rate in the seven-year economic program.
Originally,'it is to be recalled, the nation's economic growth rate was set
at under 4 percent based on a calculation of possible energy supplies.
However, an order went out from on-high to attain a 5.7 percent growth rate
and the books were reportedly juggled to stretch the energy supplies.
When the seven-year economic program was mapped out, it was calculated that ~
we would need to import 7 million barrels of oil a day in 1985 to sustain
a 5.7 percent gxowth rate.
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But at the Tokyo summit Japan's import target was reduced to between 6.9
million and 6.3 million barrels for 1.985, ~
The current economic projections are based on an import target of 6.3
_ million barrels a day in 1985. The shortfall is to be made up by energy-
saving measures and developing alternative energy sources.
Desk-top Calculation .
Can such an important matter as the nation's s~ven-year economic program be
left to a simple desk-top calculation?
It may be argued that it was necessary to maintain a consistent government -
economic policy and the projections had to be made to match up.
We feel that the council should have given the matter more thought and put
in a more reliable report.
It may be possible to maintain a high economic growth rate even if energy
supplies fall short by changing the industrial structurF.
However, real economic policy needs to consider what steps are necessary
to tide over a crisis such as an energy shortage.
Only Japan among the nations that participated in the Tokyo summit continues
to commit itself to a 5-6 percent growth rate. And, it is only Japan that
continues to estimate its energy supply and demand in such a makeshift
manner.
COPYRIGHT: The Daily Yomiuri, 1979 �
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I:Cf)N~OM ] C
- Jt1PAN INDUSTRIAL INVE5TMENTS MAY RISE 13 PERCENT IN FISCAL 1979
Tokyo MAINICHI DAILY NrWS in English S Sep 79 p 5 OW
[Texl] Industrial capital investments by big corporations in Fiscal 1979
(April 1979-March 1980) are expected to reach 9,598 billion yen, up 13
percent over the preceding fiscal year, a Japan development bank report
says.
'Che state-financed bank surveyed 1,467 business corporations capitalized ~
at 1 billion yen or ~ore about their investment plans as of August.
'Che Cotal figure represented a 7.3 percent upward revision from a similar -
sur.vey conducted last February.
Investments by manufacturing firms will advance 19 percent over a year be-
fore for the first year-to-year gain in five years. Those by nonmanufac:- -
_ turi.ng firms will increase 9.1 percent, representing the fourth straight
year-to-}~ear gain. -
Investments by manufacturers in the first half (April-September) of Fiscal
1979 will sharply advance 18.9 percent over the preceding six-month term.
Thc~se in the second half (October-March 1980) will drop 8.4 percent from
the previous April-September period.
In contrast, investments by nonmanufacturers in the first half will decline
_ 10.9 percent but those in the latter half will climb 11.8 percent. This
is chiefly because investments by the electric power industry in the �irst
half will drop 11 percent but those in the second half will increase 11
percent,
I3y industry, materials will regi.ster a rQmarkable l_9,6 percent gain in
investments thanks to an improvement in the demand-supply situation.
Notably, the chemical industry will increase 25 percent., textile algo 25
percent and paper-pulp 36 percent. T'ood and electric machinery will move
~ up 20 percent or more because of brisk consumer demand,
- Airline, retail, wr?olesale and construction were notable in i.nvestment
� p,rowth among nonmanufacturing industries.
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By investment motive, an expansion in output capacity was cited most by
26.9 percent of the manufacturing firms and by 71.6 percent of the non- -
manufacturing companies.
_ I'romotion of research and development was given by 7.8 percent of the
toeal, compared with 6.5 percent in the February survey. '
� COPYRICHT: Mainichi Daily News, 1979
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- I~Uh l)f~l~ l(:IAL US1~. ONL}�
ECONOMIC
AMBIZIOUS 5-YEAR OFFSHORE OIL PROGRAM MOVING AHEAD
Tokyo MAINICHI DAILY NEWS in English 8 Sep 79 p 7
[Text]
.lapan is going lo press ahead Japan has proposed to China The well is about l 1 ~
- with an ambitious five-year that the two nations jointly in the Japan Sea qff..
plan to bring up oil and gas develop continental shelf oil in the mouth ot the Aga ~iver in
believed deposited offshore. the waters of Senkaku, an Nugata prefecture. It produces
An organization named Nihon island group north of Taiwan 260 kiloliters ot crude oil and
Kaiyo Sekiyu Shigen Kaihatsu ciaimed by both the Peking and t.35 million cubic cneters of
~.Japan Ocean Pelroleum Tokyogovernments. naturalgasdaily.
Resources Ilevelopmentl Com- It may take time betore this The company also found a
pan~~ u~iil take charge of scheme is actually put into deposit oti the northern island
the project with a total cost of effect,sinceTaiwanalsoclaims of ~Hokkaido last February. lt
at~out 200 billion yen. ownetship of ~e uninhabited all goes we11, that well will go
Its goal over the [ive yea*s is!and group. into full praluction operation
starting in tiscai 1980 is to find The planned oil and gas sixyearsfromnow.
wells producing about 96 million development program will be The company is airaing at oil
kiloliters o~ criade oil and Iaunched on the basis of a drilling exploration somewhere
natural gas. recommendation made in July in the .lapan Sea, about 5,000
The amount, if found, would by a panel advisingthe Ministry meters below tbe surfaxe ot the _
still be a drop in the bucket, ot International Trade and water.
considering Japan's annual oil lndustry. Officials concerned believe .
consumption alone totals nearly This panel, the development the prnject will be worth putting
300 million kiloliters. section ot the oil deliberation . into practice in view of the oil
Success, however, would council. believes there are crisis triggered in 1973 and also
a f f i r m .J a p a n' s d e t e r- about 370,000 square kilometers in the wake of the era of S20-per-
mination to reduce its depen- ot basin suitable tor oil and gas barrel crudeoil.
dence on imported oil for expinration in:,the coatinental They said domestically
energ~~. .lapan relies on oil for shelfsurroundingJapan. produced oil has a low sulfur
most of its tuel needs and 99.7 1t is nok known yet w~here the content and is ot light ~uality
percenl of its oil comes from project will actually get un- suitable Por production of
overseas. derway. But the Japan Ocean gasoline. The naturai gas
This country produces only p e t r o 1 e u m R e s o u r c e s produced is said 'to be clean
0..', percent of its crude oil Development Company has energy.
- domestically. Success in the successfully developed oil and Japanese oil industry sources
project, due to get underway gas in an of[shore well in the say that about 1.3 billinn
nex t year, would bring this up to J a p a n S e a o f f N i i g a t a kiloliters of ol: and gas may be
1 percent, meaning a little less prefecture. exploitable in the sea re~ions
' dependence on imported oil. surrounding Japan, although
they don't say whether this has
been scientifically sub-
stantiated. -
12
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i~oi~ c�~ricinr, usr. c~rvi~~~
Some otticials, meantime,
= said that a future Japanese oil Chicago Commodities
- development project that is CHICAGO ~UPI1 - Wheat
likely to pay oft is the con- and soybeans were sub-
tinental shelf in the Senkak~ s t a n t i a l 1 y i o w e r, c o r n -
island area. irregularly lower and oats
The area being coasidered is lower at the ciose Thursday on
a 200,000 square kilometer the Chicago Board of Trade.
Okinawa-East China Sea Wheat was of~ 7~fi to off 12~F.
region. cents; corn'otf 8l4~to oft 5; oats
_ The L'nited Nations Com- off 1~;1 to off 2~ia; and soybeans
mission for Asia and the Far off 3 to~ff 9~F1.
East ~ECAFE~, a predecessor The market showed a lot of
of the U.N. Economic and local trading ahead of the
Social Commission for Asia and moqthly �.Conrad Leslie crop
the Pacific, reported in 1968 report released near the c)ose.
that '�there is a strong Traders were expecting about
possibilitv ot oil and natural gas what the crop indicated - a 7.3
deposits in this regtOn. ' b111ion bushel corn crop and a
It is said to b~ the only single 22 blllion bushel soybean crop.
area where as much as 800
million kiloliters of oil may be -
~ found, according to officials.
~ COPYRIGHT: Mainichi Daily News, 1979
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I~;(:I1N(lpt l .
MITI GIVING UP ON INDEPENDENTS FOR ACQUIRING CRUD~
?
Tokyo ASAHI EVENING NEWS in English S Sep 79 p 5
-
[Weekly Economic Review column by George Murakami: "MITI Piay Stop
P1-otecting the Oil Industry"]
[Text]
L.ET me recapitulate what . terms for itself. Finally, oil re- sounds a bit. unreal but that's -
I said in this space last week ! fining and marketing has not the way it's done. -
, about t11e case of Toa Oil, been too profitable a busi- Taa-Kyaseki's refinery is
a small independent Japanese ness in Japan bot it is getting operating at only 60 percent ~
refiner. Toa has deficits of� better since refined product af its 100,000-barrels-a-day
~7.2 billion, owes ~30 billion prices are now rising faster capacity, the chief reason for
to C. ftoh & Co., the big than the price of crude. its troubles, but C. Itoh plans
Osaka trading house. In even Now about Toa-Kyoseki. to,shift 40,000 barrels of Toa's _
worse shape ~s Toa-Kyoseki, a C, Itoh is turning it over to daily~ output to Toa- Kyoseki. ~ _
joint refinmg venture Toa has 1fie shift may not be to
Nippon Mining, a copper re-
with Kyodo Oil (Kyoseki), the Showa's liking and could be-
Govemment-backed sales agen- finer also deeply in oil. To come a stickipg point in the
cy for Toa and five other deal with Toa-ICyoseki's ~'S1.4 Toa deal.
Japanese independents. Toa- billion deficit, its capital of Nippon Mining is taking
Kyoseki has ~�51.4 billion in ~12 billion will be cut to zero, over Toa-Kyoseki for much
deficits. which writes off on the books Ehe satne reasons as Showa's
C. Itoh, which with its as- this arnount in the deficit. The in Toa's case. C. Itoh, in
sociates owns 44 percent. 'of stockholders - Toa, Kyodo unloading Toa-Kyoseki, is giv-
Toa, is selling a controiling Oil, C. Itoh and Arabian Oil ing Nippon Mining favorable
25-perceat interest to Showa -take the loss but they can't terms and not only because it
Oil, the affiliate in Japan of complain since tho money's is being relieved of a basket.
Royal Dptch Shell. Some gonc anyWay. New shares ~n It. is a big importer of
- details remain to be worked Toa-Kyoseki will then be issu- cr~de - 400,(m0 barrels a
out but Showa is eapected to ed, with Nippon Mining taking day-and will continue to
take over Toa in October. and paying for a controlling have a customer in Tou-
tJnder terms of the deal, C. interest~ thus putting fresh Kyoseki. 1t will need Toa-
Itoh will market half of Toa's mone.y into the company. Kyoseki's output. to supply its
output. � Next, Toa-Kyoseki's assets profitable marketing subsidia-
Showa presumably is buy- -a refinery and its site, much ry, C. ttoh Fue1..Again, amoRg
ing into Toa in order to ex- of it tmused, in Aichi Pre- the major trading houses, C.
pand its 11.9-percent share of fecture - will be revalued up. Itoh's metals division is the
the Japanese oil market. Also, ?he assets are ~ now on the weakest and better , connec-
Showa eariier had entered into books at original ~1973 and tions with Nippon Mining wili
a 20-year contract with Toa earlier) cost but inflation since help. here.
in which the latter is to re- then has sent up their worth. The loser in these deals looks
fine crude for it on consign- Part of the idle land may be to be Kyodo Oil. It is the joint
ment, an arrangement which soid. Any remaining deficit sales ageacy for Toa, Nip,Qon
would cost Showa'f30 or'~40 W~ll bs borne 50-50 by C. Itoh A~inirtg and four other small
billion. With Toa under its con- and tlippon Mining. This
trol. Showa can get better ~~~P~ng ` sleight-of-hand
~4
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independents, and the Minist- catch the mice (oil)." imperialiyt or colonialist type,
- ry of International Trade and The indepenc~.ents are doing if you lihe, but an aggressi~e,
lndustry is its chief backer. ~ittle about, catching rnice, adaptable man of the kind not
"I'oa is expected to drop out Aside~ ~ from Idemitsu Kosan, to be found these days among
uf Kyodo, and the other fouc the largest of them, thd: inde- Japanese oil executiveR. The
reEiners are not going to like ~ pendents have no repres�nta- trouble with the .Japanese oil
- the much bigger weight Nip- tives, abroad to secure cnEde ~ndustry, say many people, is
pon Mining will command S4d ;L,ely on ~.the majors and that it is ~rotected, favored,~
with its acquisition of Toa- trading houses like C. Itoh. re8~~lated by MITI. It needs
Kyoseki. The chronic squab- ~yhen~ ~ erixie we's ~~in ~ surplus, altey cat typos, not inp pets, '
bling within Kyo~o is already the inajors obligingly gave the if itis to get the mice.
mounting. Moreover, MITI has ~ndependents credits to buy it MITI is implying it is giv-
given its tacit blessing to
Showa's takeover of Toa and and loans to build and expand ing up on the indepeadents
is having second � thoughts refineries. . Now, the m~jors and wip rely on goveratneat8l
about oil policy. ' are being forced to cut�supply agencies like the Japaa Pefia
ln the days bef~re the 1973 ~o refiners other than their leuai Development Corpota.
oil crisis, whi~.h chan ed own affiliates as the oil-pro- tion to do the job. This may
everything, MiTI focused gon d~ciug countries: taJce over a be a logical step aiaee, as heg
- the downstream aspects (re- g~'owing share of the market- been said, the oil - producin~
fining, marketing) and not up- 1�g ,of;.their crtide output. stazes are doing more of~thetr
stream (exploration, crude Altkough� th'e Government own marketing of crude. A2so�
production) in trying to build has not done much to et~cour- oit is beeoming increasingly a
up the independent refiners age the independeats in past Political commodity. The im.
and reduce the domination of years to move upstream into P~~cations are disc}uieting,�aad ~
the domestic oil products mar- exploration and production how well matters will go ttlong
E:et by the affiliates in Japan abroad, ihe fault of omission ~his neW policy line, if it is fol-
of the international oil com- may lie more with the inde- lowed, remains to be seeq~
~ panies-the "majors." Policy pendents themselves, Arabian Meanwhile, at home, if
has now moved upstream, to Dil of Tokyo is the only large MITI goes through wlth the
getting enough crude. As a Japanese overseas producer, ~dea of less protection aad
M[TI official puts it in an operating wells in the Kuwait- more competition it1 0~7, thete
adaptation of Deng Xiaoping's Satidi Arabia N'eutral Zone, w'ill be more cases I'ike Tost's
saving, "It doesn't matter Its late founder - presidenE, and likely consolidation of ~he
~.vhether the cats are black Taro Yamashita, had been a independents into fewer,
iforeign alliates) or white (in- business ezecutive in Korea stronger and perhaps more aQ-
dependents} sa long as they and Manchuria-an economic $ressive units.
COPYRIGHT: Asahi Evening News 1979
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LCONUMIC ~
SALE OF TOA OIL TO SHOWA OIL EXPLAINED
Tokyo ASAHI EVENING NEWS in English 29 Aug 79 p 5
[Article by George Murakami in column "Weekly ~conomic Review": "C. Itoh
Gets Rid of. a White Elephant"}
[`Cex t] THE big 6usiness news item will bear with me as I try'to four other smaii independents,
last week was the deal undcr get clear some oP the details with MITI's urging and back-
which C. Itoh & C:o., No. 3 and implications. The oil game ing, focmed Kyodo 011 to act
saiong tho big tiading houses, is important in these energy- as their joint sales agent.
agreed to sell working coMrol crisis days and you should MITI at one time had fond
of Toa Oil to Showa Oil, have some idea of the ]ocal dreams of developing Kyodo ~
the affiliate in Japan of Royal players and umpires. A1so, oil into Japan's own internation-
Dutch Shell. In a related is big money, although I will al major, like British Petra
_ agreement, C. Itoh is alao to be discussing mostly big tosses, leum or French Petroleum,
hand Over control of Toa which may not be as interest- operating boti~ "upstream" (ex- _
Kyoseki, a joint venture of ing, ploration, crude production)
Toa Oil and Kyodo Oil (Kya The oil refining industry in and "downsvcam" (refining,
seki), to Nippon Mining, a Japnn is divided between the marketing), but the fact is that
~etal refiner ~vhich is heavi- ~pnnies linked with the in- Kyodo has never gone very
ly ~n oil. Various details re- terQa4ionai oil firms--the "ma- well because of the squabbling
main to be worked out but the ~o~~~ _ and the Japanese oil among its member companiec.
deals are rated as firm and independents. In the first cate- The Petroleum Industry
are expected to go through by go~,~ the major either owns a ~~r of 1962 was eaacted
- ' October. co�trolling interest in the when Japan lifted import con-
The consequences are nu- Ja enese firm or is in with it -
merous and complex. The p trols on oil and gnve MITI
1~iinistry of International ~n a joint refining venture. e measure of controt over the
Trade and Industry has given Shell has 50 percent of Sho- industry. The law focused al-
its tacit blessing to the ar- wa, Esso (Exxon) and Mobile most ent?rely on tha down-
rangements, and this signals 25 percent oach of Toa Nen- 9tream aspects and a MITI
important changes in Japan's ryo, Getty OiI SO percent of council, through its power to
oil ro'.icies. Kyodo Oii, which Mitsubishi Oil. Caltex (a joint grant new refinery per-
MITI has long sponsored as a firm of Standard Oil of Cali- mits, ngulated the capacity of
means of building up the Japa- fornia and Texaco) has a joint the various companies. Al-
nese oil independents, may refining venture with Nippon though there was some con-
break up. Shell, through Sho- 0i1, the largest oil company cern that the law would be _
wa Oil, looks to ezpand its ~n Ja~san, and also a 50-per- administered so as to fa-
1 l.9-percent share of the Japa- cent interest in Koa Oil. Esso vor the independents, the re-
nese oil market. C. Itoh, al- recently acquired a 49-percent finers affiliated with the ma-
though it still has heavy ~nterest in Gener~l Sekiyu and jors eontinued to hold the
burdcns, should come out has as woil a joint refining lion's share of the market and
ahead. Consolidation, mean- affiliate with it. they still do.
ing merger or new working Amon; the independents, C. Itoh bought into control
- ties, atr~ong the smaller indo- Idemitsu and Maruzen Oil are of Toa ia 1965. This was at
pendents is likely. the largest. The rest, includ- a time when world oil supply
'The complexities invoived ing Toa, are fairly modest in was in surplus, Japan had
are Byzantine but I hope you ~ale. Toa, Nippon Mining and shifted from domestic coal to
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- oil as its chicf encrgy source 60 prrcent of capucity and has
und oil looked likc a big run total deficits oF,~'S1.4 bil-
growth field. Under provi- 1?on. Toa's own curnulative
sions of the Petroleum Zndus- losses, within the company it-
try Law, C. Itoh in acquiring self, are ~7.4 billioa.
Toa got the right to import
oll directly and also the right Mottover, C. Itoh has
to market refined products. loaned Toa about ~i'20 billion
The Ton connection was also and its subsidiaries another
useful in building up overseas '~12 billion, and the annual
business ties-C. Itoh could interest costs on financing ex-
represent itself as the owner tended by it to Toa-Kyoseki
of an oil refining company- run to '!'7 billion. Further, C.
and the trading house now im- Itoh has absorbed through �
ports ar~und 400,000 . barrels merger, another big trading
of crude daily. It aiso built up house that nearly went under,
a subsidiary, C. Itoh Fuel, and this is a big burden. It was
into one of the biggest oil dis- involved in an operation to
tributors in Japan. rescue Toyo Kogyo, the au�
Toa itself, however, turned tomobile . man~facturer, but
out to be a disaster. A ven- was forced to turn this over
ture in tankers was a costly to the Sumitomo Bank.
failure. A~75-billion gas de- How C. Itoh was able to
unload these basket cases on
sulfurization facility at its Showa Oil and Nippon Min-
Kawasaki refinery is a white ing and the terms of the deal~~
_ elephant. The biggest mistake is a long story, which I will
was the joint refining venture take up in this space along
with Kyodo. The Toa-Kyoseki W~th ruminations on MITI's
refinery at Chita, Aichi Pre- oil policies and the consequ-
fecture, is operating at only ences for the oil industry.
COPYRIGHT: Asahi Evening News 1979 _
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ECUNOMIC
RETIRED MITI OFFICIALS SNAPPED UP BY STEEL INDUSTRY
Tokyo ASAHI EVENING NEWS in English 13 Aug 79 p 5
[Article by Yasushi Hara in "The Nation" column: "Economically Speaking"]
[Text] Competition has become in- was the case of Norifumi ister Masumi Esuki and other
tense in the steel industry dur- Kumagai, a former MITI vice senior ministry officials and
, ing the past several years in minister~ who became presi- the heads uf the major steel
the hiring of off'icials retiring dent of Sumitomo Metal. At companies, including Yoshihiro
from the Ministry of Interna- N~ppon: Steel, Eiji Yams?gata Inayama, president of the Ja-
tional Trade and Industry. ~ (a former director-general of Pan Yron and Sterl Federadon.
Cozy t~lations have devel- the Natural Resources and The~ ~ederation was getting a
_ oped between MITI stnd the Energy Agency) was prom~t- new president, and this' was a _
industry, which , operates un- ed at the genSrsl atockhold- mecting held for introduc-
der a cartel - Iike setup in ers' meeting u~ June from or- t~Iy purposes. T`h6 man who
which the ministry lays down dinary diiectar to. mana in arranged ii was Yamagata, the
g g foruier direcior genaral of the
guidelind on aueh matters as ~director. Yugoro Komatsu, ~esources - Ener A enc
levels of crude steel production aaother former MITI vice ~ g y
and regulation of piant capaci- minister, who entered Kobe ~w'h'ch ~s Part oE MITI) and a
ty of tho major stcel compa- 3teel lasL September as an ad- managing director at Nippon
nies. These relations now ~ook visor has been moved , up ,tn Steel. MITI had ]unted to him
to gei even closer with ex- vice president and w~th the that it wanted the .meeting,
MITI� officials mo~ing into promise of eventual succession Yamagata took the matter to
management posts in the steel to the presidency. his colleagues at Nippon Stcel,
companies. What all this means i~ that and the get-together of leaders
`~ex-offlclals of MTTI and other of Japan's top iadustry and
The companies, in hiring Government policym'akbrs was
them, say they are preparing economic ministries and agen- set up. � '
for the coming .pra of more cies make up a prominent AgaieY, for tha steel industry
aggressive opecations to meet p~ of tQe executive rosters to get lthrough�.. the years of
the intensified competition in aE . managiug`~ direciors aad uncertainty� Ahesd; ii ~eods ea-
world steel markets from the higher in the Big Five steel ecutives who customarily take
new industrial developing companiea. This may b~ un- a broad.vicw of matters� Here~
countries. Whatover may be avoidable to some extant in MITI officials azc tst~d~'fivor-
the reason, this process of ez- the case of Nippon Steel, ably for theii ability~ and ez-
officials from MITI and other Whose precursor was a state- ~ricnce in dealing with high-
government agencies shifting backed corporation, but some level policy problems. Kuma-
into the ateel industry does peopl'e even ~n the steel indus- gai, the ex-MIT1 bureaucrat
raise various questions. try. feel ihat the practice of ~ president of Sumitomo
Among such officials are former Mi"TI bureaucr~ts mov- Metal, sees the process of
Kinxo Matsuo (ex-MTTI vice 1�g ~tO ~e Posts, of vice pres- UBhter managemant as having
minister), now board chair- ident and pres~dent of ihe oth- run its course and is now
- man of Nippon Kokan (NKK), er four cna}or steel companies building up the company's steel
Yukio Miyake (former direc- ~~nappcopriate. fabrication and engineering
tor genera~ of thc Patent 0~ reason the big steal divisions. At Kobe Steel, an-
Agency), an NKK managi:.g ~ companies like to have ex- other ex-official now serving
director, and Caihaya Kawa- MIT'I official~ is their useful- vice president, Komatsu,
da (former deputy director of ness in liaison and other con- ~s ro~ted on to �bring bettec _
the Ec~nomic Planning Agen- For example, a meeting teamwork amonb its ateel,
~y), vice president of Kawa- took place at a Tokyo re- ~umin~m ~n� aiachinery divi-
saki Steel. Last year, there staurant between MITI Min-- sions. ~
Thcre is much that is still
COPYRIGHT : Asahi Evenin News 1979 strong and flourishing ir. the
g 18 Japan Tnc. concept.
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ECUNOMIC -
BRIEFS
- YEN CREDTT TO MFXTCO--The Japanese Government has informed the Mexican
Governmen~ of its plan to provide a 30 billion yen credit to Mexico to
help finance the (Las Toluchas) iron works project. The yen credit wi11
be spent for port and road construction and other infrastructural mainte~ _
nance to support the iron works project, the biggest industrialization plan
~ in Mexico. The credit, to be appropriated from the overseas economic co-
operation fund, is designed to give financial aid to the economic develop-
ment of Mexico and hopefully increase crude oil imports from that country.
The plan was conveyed to Mexican Government leaders by Foreign Minister
Sonoda and Minister of International Tr.ade and Industry Esaki during their
recent visit to the Central A.merican country. [Tokyo NIHON KEIZAI SHIMBUN
in Japanese 30 Aug 79 Morning Edition p 1 OW]
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