JPRS ID: 9110 JAPAN REPORT

• Document Type: CREST
• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000200080047-0
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 31
• Document Creation Date: November 1, 2016
• Sequence Number: 47
• Content Type: REPORTS

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; JPRS L/9110
27 May 1980
Japan Report _
(FOUO 14/80)
J
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' JPRS L/9110
27 May 1980
JAPAN REPORT
, (FOUO 14/80)
i
CONTENTS
POLITICAL AND SOCIOLOGICAL
i
Nakasone Renewa Activities To Win LDP Preaidential Nomination
~ (Minoru Shimizu; THE JAPAN TIMES, 8 May 80)
;
1
' Code of Ethics Envisaged for LDP
(BUSINESS JAPAN, Apr 80)
4
Authorities Fear New Action by Japan Red Army
' (BUSINESS JAPAN, Apr 80)
6

Scandal Prompts KDD Reorganization
(BLTSINESS JAPAN, Apr 80)
8

Moves Within LDP To Check Komoto
I (BUSINESS JAPAN, Apr 80)
;
10
-ECONOMIC
, Expert Says Japan Can Alleviate Inflation .
(Masaoki Kojima; CHUO KORON, May 80)
12
Export-Import Bank To Sponsor ASEAN-Japan Meeting
(MAINICHI DAILY NEWS, 19 Apr 80)
19

' Toyota-Nissan Dilemma: Overseas Production or Export Reatrict
ion
(Hokaji Mino; BUSINESS JAPAN, Apr 80)
20
Stable Supply of LNG at Senaible Price Could Relieve
- Energy Crunch
(Hiroshi Anzai Interview; BUSINESS JAPAN, Apr 80)
22
Demand for lJil Riga Counters Shipbuilding Crisis
(BUSINESS JAPAN, Apr 80)
26
: - a - [III - ASIA - iii
FOUOJ
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POLITICAL AND SOCIOLOGICAI,
NAKASONE RENEWS ACTIVITIES TO WIN LDP PRESIDENTIAL NOMINATION
OW091231 Tokyo THE JAPAN TIMES in English 8 May 80 p 14
[Article by Minoru Shimizu: "Nakasone Restarts for LDP Election"]
. [Text] Yaeuhiro Nakasone, one of the candidates for president of the Liberal-
_ Democratic Party, has renewed his activities for the presidential election
scheduled for late this year. Over the past 10 days, news of his activities
strongly tinged with self-promotion has come from Beijing.
_ He started his two-week sojourn in China on April 27 upon the invitation of
. the China-Japan Friendship Aasociation and has since conducted talka with
top Beijing leaders including Premier Hua Guofeng.
- Topics of discueaion at these meetinge ranged from economic issues auch as
China's economic issues such as China's economic construction to defense
and international iaeuea including the Russian invasion of Afghanistan and
the Iran criais. While discusaing Japan's defense role, Nakasone induced
_ a top Chineae defenae official to say that in view of current relations wih
the Soviet Union, Japan should do more in terms of defense efforts auch as
increasing the defense expenditure to 2 percent of the GNP. (At present,
Japan's defense apending comprisea 0.9 percent of the GNP.) Thie comment
prompted annoyed Foreign Ministry officiale to criticize the Chineae as
having interfered in Japan's domestic affairs, which helped further draw
popular attention to Nakasone's China trip.
Future Leaders
Nakasone once said that future leadere of Japan must conduct frank exchanges
of views with their Chinese counterparts. He probably meant to put into
, practice what he had preached on the occasion of hi8 current visit to
Beijing.
In a speech at a welcome receFtion for him in the Chinese capital, Nakasone
said Chat recent developments showed that Chinese leaders had more insi.ght
into the true nature of the Soviet Union and its leaders than Japaneae and
conducted self-criticism on account of the optimistic view that prevailed
1
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among his countrymen. Commenting on the report, an LDP leader said with
a wry smile that the unabashed singing of praise of Chineae leaders was
very Nakasone-like. He and many other top LDP men observe that apple
polishing is Nakasone's favorite method of making friends.
- Current China Trip
If his intention was to make the most of his current China trip to impress
_ both overseas observers and people at home that he is still an active and
important factor in Japanese politica, Nakasone has certainly achieved it.
Scheduled to return home tomorrow, he is planning to conduct a speech tour
to varioue parts of Japan to report on his tour.
For the past four months aince intraparty strife rocked the LDP laet year-
- end, Nakasone had chosen to remain quiet. He suddenly emerged from in-
activity apparently as a result of increasing alarm among hia aides as
well ae himself that continued inertia would rob him of any chance of win-
ning in the coming LDP presidential election.
l"
That Nakasone is one of the stronger candidates to succeed Ohira after he
quits the presidency is widely accepted in view of his paet performance and
position in the party. However, he has lagged far behind Ohira and his
strong rival, Toshio Komota, a former international trade and industry
minister, in collecting supporters among LDP members who will cast ballots
in the first round of the two-stage LDP presidential election.
It is reported that both Ohira and Komoto have collected some 1 million
party members each who will vote for them while Nakasone supporters number
about 600,000 to 700,000. The LDP presidential election consists of two
aCages: In the firat stage, all party members and associates cast ballots
for the leader of their choice from among any number of candidates and the
top two vote getters will udvance to the second stage in which only LDP
members of the both houses will cast ballots to choose the president.
Therefore, the first step for becoming party chief ia to collect as many
aupporters as possible among the registered party membera and associate
members.
According to an LDP announcement, the party now counts about 3.1 million
members and associate members, nearly twice the total registered at last -
preaidential election. This sharp increase has largely been due to the
spirited drive to recruit new members by Komoto who belongs to the faction
headed by foYmer Prime Minister Takeo Miki. The rumor that Komoto has -
collected 1 million registered supporters has, in turn, spurred close aides 4
of Ohira, who is seeking reelection, into a atepped-up membership expansion
_ campaign. Thus the two men are now reported to have secured some 1 million
- aupportere each. =
If the election were held today, Ohira and Komoto would place first and
_ second, respectively, in the preliminary election, giving Nakasone no chance
- 2
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EVn urrlt,lesi., uoz U1vLY
to survive to the second-stage election. Should he be beaten in the first-
stage election, Nakasone will find himself in an awkward situation where
his atatus as a future LDP head will be seriously questioned.
' Anti-Ohira Factions
- These developmenta have forced him to maneuver to solidify hia support base
- &nd win "floaters" over to his camp. His current visit to China has been
. one such attempt. ,
Nakasone has also begun to work for closer relations with two top figures
, of the anti-Ohira factiona, former Prime Minister Takeo Fukuda and former
Agriculture-Forestry-Fishery Minister Ichiro Nakagawa. Fukuda has not,
according to his aides, made up his mind whether to enter thia year's LDP
election. He has been asserting that the firet-round election ahould be
"fozen." His position is that last party presidential election showed that
attempta to garner supporters in the first round of voting resulted in the
expenditure of a large amount of money. Fukuda does not want to see this
repeated and wants to do away with the preaent system of preliminary elec-
tions. As for himaelf, Fukuda is considered to have some 300,000 supporters.
Presidential Post
Nakagawa, generally regarded as a contender for the LDP presidential post
in the near future, is friendly to Fukuda and represents right-wingers in
the LDP. Known to command some 100,000 votes, Nakagawa has made it clear
that he is not running in this year's election.
- That is, Nakasone is believed to be calculating that if he can take over
the aupporters of Fukuda and Nakagawa with their bosses' approval, he can
edge Komoto out during the preliminary election and place second, and thus
advance to the final election. In recent weeks, Nakagawa.and Nakasone
have been meeting frequently. If they can reach an agreement to join forces,
it will have a conaiderable effect on the result of the preliminary election.

_ Dubbed a"political weathervane, Nakasone is known for his unpredictability,
and even his aides are not sure what he is preparing to do next. But his
recent movea, aimed apparently at solidifying his. position for the coming
party election, are certain to activate factional races for the preliminary.
It is too early to predict whether Nakasone can place in the top two in the
_ first-round election. What is certain is that he will intenaify his activi-
ties in and out of the party to mark his presence.
COPYRIGHT: The Japan Times 1980
CSO: 4120
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POLITICAL AND SOCIOLOGICAL
CODE OF ETHICS ENVISAGED FOR LDP
Tokyo BUSINESS JAPAN in English Apr 80 pp 18, 19
[Text] The Liberal-Democratic Party
(LDP) plans to formulate a charter on
ethics. The Charter Drafting Com-
mittee headed by Takas}ii Hayakawa is
scheduled to compile the charter by
this May. In the first committee meet-
ing held recently, there was an active
discussion on the subject of political
ethics. From the next session, it is said
that fonner prime ministers Takeo
Miki and Takeo Fukuda as well as
various xholars will be invited to
' atlend the meetings to express their
opinions. In the first meeting, the
discussion dwelt. on several topics such
as the fading "bushido (the ethics of
samurai) spirit," the problems inherent
to political factions and the question
of how politicians should sever their
relations with "dirty money:"
The question of compiling a charter
on ethics was broughk up last year
after the bitter experience of the
Lockheed aircraft scandal. St:i ne
members of the LDP suggested form-
ing a charter as a means to guide party
members. After the battle
for party leadership ended,
discussions were unfolded to
reform the party. The formal
decision t.o work out a char-
ter was made in January dur-
ing the regular party conven-
tion. At the reeomendation
of Prime Minister Masayoshi
Ohira, Mr Hayakawa, who
is wctl verscd inparliamcntary systeins
including the pulitical Iiistory of Eng-
land, was namcd the hcad of the
Charter 1)raftinR Committee. .
Leading members of various f'ac-
tions and Narty eldcrs participated in
the committce mccting. The first
mceting was givcn tu a frce exchange
of oF?nions. One of the party elders
stated: "Tlie s;imurai styte of sensc of
duty (courage, loyalty and sincerity) is
fading away from our party ethics. We
must shed the coluring of the trades-
man's morality from our party:" Then,
a younger member of the party pco-
posed "We must revert to the spirit of
the founding days of the party when
responsibility and courage were em�
phasized," and lamented the lack of
"soul" in party members.
Another party member stated his
opinion: "In this age of interna-
tionalism, the politicians of LDP must
have a broader, international sense of
ethics." There were some realistic
opinions too such as: "There is no
sense in just talking. What needs to be
done is to strictly implement puiiitive
m,ea.sures against the violators Qf party
rules: Punis~iments must be" meted out
severely."
Chairman Hayakawa stated: "It is
important for politicians to distinguish'
between public and private matters.
The practice of politicians receiving
money from politicians must be
stopped. Factions should be allowed
to exist only within the limits of
policy matter: '
The appeal was made for politicians
to abandon their factional depeiidence
and to stand on their own feet. Many
proposals were made by party mem-
bers who often related their own
experiences.
4
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The issue is when will these pro-
posals be translated into actual politi-
cal activities. As for the contents of
the cliarter, it has merely been sug-
gested that it will be submitted to
other organs within the party such as
the election system study council. At
present, the election system study
council and other organs are discussing
the eleciion system, campaigns and
political funds. However, not much
progress has been made. It would be
surprising if additional proposals
would be readily accepted by the
par ty.
It is feared that no matter how
much trouble the party goes to in
compiling a charter, the proposals will
get buried away in some obscure cor-
ner and the charter will become
nothing more than a pep talk for the
House of Councilors clection.
COPYRIGHT: Nihon Kogyo Shimbun 1980
CSO: 4120
5
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POI.ITICAL AND SOCIOLOGICAL
AUTHORITIES FEAR NEW ACTION BY JAPAN RED ARMY
Tokyo BU SINESS JAPAN in English Ap r 80 pp 26, 27
[Text] The National Police Agency and
other security authori:ies have re-
cently received convincing iuformation
that Takamaro Tamiya, 36, a former
student of Osaka Municipal University
who, as ane of the nine leaders of "the
Red Army" group, escaped to the
Korean Democratic Peoplc's Republic
(North Korea) after having hijacked a
Japan Air Lines' plane a decade ago, is
now living in East Germany. It has
been affirmed that Tamiya attempted
to enter Britain in September 1976
with a forged passport but failed and
was then compulsorily returned to the
communist-bloc nation via Denmark.
The investigations made following his
reported return have revealed that he
did not go back to North Korea, but
stayed in East Germany aW continued
his activities there. The security au-
thorities have become more and more
suspicious that Tamiya has been acting
as an important contact between the
group members in North Korea who
werc involvcd in thc hijack and thc
Japan Red Army group Icd by Fusako
Shigcnobu which is bised in thc Mid-
dlc and Near I;ast. Tlic autliorities are
concerned that they may be planning
to start a new guerilla warfare of-
fensive because of recent activities of
the Japan Red Army. The reason why the security au-
tliurities have suspected that Tamiya
may be staying in Easl Gcrmany is
bccause there is absolutely no trace to
be found of his arrival in Nortli Korea
6
even though it was said that he was
returned to North Korea from Den-
mark by a Romanian Airlines plane.
Furthermore, the authorities have ob-
tained valid information recontly that
Tamiya was seen in East Berlin.
Born in Shibata City, Niigata Pref-
ecture, Tamiya was one of the top
leaders of the Japan Red Army, a com-
munist group aiming for a Bolshevik
revolution. After graduating from the
Fc.onomics Department of Osaka Mu-
nicipal University, he led such dis-
turbances as the Quartier Latin struggle
at Kanda, Tokyo, in 1969 and the fght
to prevent Prime Minister Eisaku Sato's
visit ta the U.S. the same year. But as
regulations were effectively enforced
by the police, no more violent activities
became feasible. In March 1970, hc
escaped to North Korea by hijacking
the Yodo, JAL's passenger plane for
flight 351 from Haneda, Tokyo, to
'Fukuoka. He was accompanied by eight
group members of the Iapan Red Army.
It was then reported that he had been
staying in a boarding house in the sub-
urbs of Pyongyang.
In November. 1976, however, when
Mr. Minoru Oda, a novelist, visited
North Korea and interviewed the Red
Army members for four hours, only
- Tamiya, thc lcadcr of thc group, was
not thcrc. Thcn thc sccurity audtoritics
started to imestigate Tamiya's activ.
ities.
It was only at the end of 1976 ttiat
tfic rcason fur his abscncc was found. A
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Japancsc man wlio tricd to enter Britain
� fcom Dcnmark was temporarily con�
strained on Septembcr 1976 because
the passport hc was carrying was found
by the immigration officcr to Uc forged.
The passport IookeJ genuine, an almost
exact copy of those issued by the Jap-
anese governmcnt. The man's count-
= enance and pliysique were very much
like Tamiya's and he carried with him a
letter addresscd to the Red Army activ-
ists in Japan. tie also had a map of
Japan. The letter read as follows:
"After leaving Japan, we are now suf-
fering many difficulties, but the time
will come when we will take firm steps
toward the revolution."
The man was sent back to Dcnmark,
his departure point, and then teturned
foreibly to North Korea, it was re-
- ported.
The security authoritieshave already
confirmed tliat the man was Tamiya.
Since then, however, the authorities
have obtained a few more pieces of in-
formation which show that Tamiya was
- seen in Berlin as well as on a train con-
necting East Bedin with Turkey. Also
basing their conclusion on reports given
by those who have visited North Korea,
. the authorities are now almost 100%
certain that Tamiya is now in East
Germany having gone there aftee leav-
' ing Denmark. .
When missions sent by the Japan So-
cialist Party and the New Liberal Club
visited North Korea last year, the North
Korean government evaded any expla-
nation in detail about the current moves
of the nine activists. But, according to
some leading newspapers in South Ko-
rea, at the preliminary talks hcld at Pan-
munjom February 19 between the re-
presentatives from North and South
Korea for establishing diplomatic rela-
tions, a newspaper reporter from North
Korea disclosed that a part of the Ja-
panese group that had hijacked the
Yodo had left thecountry. The security
authorities assume that Tamiya was
among them.
The security authorities belicve that
Tamiya is using some embassy in East
Berlin as his base, and his reason for the
long-term siay is to act as a contact
between his comrades in North Korea
and the Japan Red Army ledby Fusako
Shigenobu, 34, based in the Middle and
Near East. Both groups are belicved to
have already star4ed planning a new
joint action and are now organizing
their moves.
There is also othervalid infurmation
rcparting that fuur members of the Ja-
pan Red Army i,icluding Masao Ad:ichi,
40, a former movie director, and Junro
Okudaira, 31, left Lcbanon at the bcgin�
ning of January. Tlic security autliori-
ties suspect that tlicir move must be
cunnected with the fact that Tamiya is
now in East Berlin.
COPYRIGHT: Nihon Kogyo Shimbun 1980
CSO: 4120
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POLITICAL AND SOCIOLQGICAL
SCANDA,L PROMPTS KDD REORGANIZATION
Tokyo BUSINESS JAPAN in English Apr 80 pp 22, 23
[Text] An extraordinary general meeting of
shareliolders tonk place on February
20, 1980, at the head ofCce of KDD
(Kokusai Denshin Denwa Co., Ltd.) in
Nishi-Shinjuku, Tokyo. KllD is now
floundcring in the midst of a large-scale
investigation touched off by smuggling
ctiarges, a scandal that is now spreading
to suspected bribing of political and
administrative officials.
The general meeting nominated Teru
Hidaka, director and adviser of Yama-
ichi Securities Co., and Gen-ichi
Masuda; president of Nippon Asia Kai-
tei Cable, as new managing directors of
- KDD. Immediately atter obtaining the
approval of the Ministry of Posts and
Telecommunications, the board of di-
- rectors appointed Hidaka to the posi-
tion of chairman and Mxsuda to presi-
_ 'dent, laying the foundation for a new
management setup at KDD.
As a result, Shinzo Furuike, who was
- concurrently chairman and president of
KDD during the interregnum following
the ouster of the former President Ita-
_ no, resigned from both posts at the
board of directors mceting and will re-
main merely as ar, adviser until the ex-
piration of his term of office in June.
in the meantime, Furuike had been
attempting to repair the darriage result-
ing from the scandal and to reform the
company setup including the dis-
solution of the notorious "President's
Chamber," reporter to be the center of
corruption and crime.
. Tlius KDD, violently shaken after
the exposurc of extensive smuggling
activities, has at least survived the first
8
crisis and now has a reformed manage-
ment siructure. But thc company's fu-
ture is anything but serenc, as symbol-
ized by the stormy general meeting af
shareholders.
Reconstruction does not end by
merely correcting 'the former manage-
ment organization and attitudes that
ga-re rise to extensive corruption. The
scalpel of reform must reach deep into
the management philosophy itself. '
Regaining of confidence would be
impossible without a thoroughgoing
cleaning-up. The management structure
and the basic attitude of directors,
which led to corruption and the ensuing
scandal, must be considered in discuss-
ing the smuggling, the huge amount of
entertainment expenses and "presents"
to government offcials.
In the background is the distortion
of management ethics accompanying a.,
monopoly enterprise and the profi[
structure which enabled the squander-
ing of entertainment allowances "like
water: "
~
KDD was established in 1953 in or-
der to raise the level of Japan's tele-
graph and telephone service to tliat of
advanced western countries at the ear�
liest possible date. At first the consoli-
dation of management structure by
means of greater profit was given top
priority.
Original and flexible management
operations were carried out successfully
thanks to a civilian-type form of enter�
prise organization. KDD soon built up
telecommunication technology that
was counted amoung the best in the
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world.
Late last year KDD had to lower
. In recent years services
international telex and telephone
of KDD gradually shifted
charges under the pressure of public
their emphasia to the leae-
apinion. The new management sliould
- ing of equipment auch as
pursuo the policy of sharing profits wilh
telex machines to users
uscrs instcad of monopolizing lhem for
.
International telelhone sys-
their own uses as in the past. '
Thc problem of management etllics
tems, the international pub-
boils down, in the final analysis
to how
lic digital network program
(Venus program) and data com-
,
tu expand services to users. BothChair-
munication have brought about
man fiidaka and President Masuda have
"
expressed their wish
for management
an appreciable cost reduction
to consider the voice of outsiders, in-
since these systems operate
cludinguscrsandspecjalists."
automatically for the most
!f KDD succeeds in the reforms that
part. This has contributed
these two leaders have promised, users
to an enormous increase in
will gain a powerful ally. Only then can
prafits for KDD.
KDD reject the "administrative inter-
"
Management during the hec-
vcntion
contemplated by the Ministry
of Posts and Telecommunications and
tic early days should natur-
become a"iruly civilian enterprise not
ally dif f er f rom that in the
w�allowing in monopoly" (Chairman
period of stability, when the
Ifidaka), for the origin of KDD's man-
company has attained the inter-
agement is located in the users and not
national level. But KDD's
in thc Rovernment. The key to recon-
management, revelling in its
struction may be found unexpectedly
monopoly, failed to take posi-
nearathand.
tive steps from the users'
' standpoint. This attitude
soon resulted in greed and
corruption.
An increasing number of
users have been complaining
� recently that KDD's service
has deteriorated in propor-
- tion to its accumulating
profits and that its privi-
leges as a monopoly were
exerting a corrosive influence.
COPYRIGHT: Nihon Kogyo Shimbun 1980
CSO: 4120
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FOIt Urr'1clA1, uaa UNLY
POLITICAL AND SOCIOLOGICAL
MOVES WITHIN LDP TO CHECK KOMOTO
Tokyo BUSINESS JAPAN in English Apr 80 p 19
~ [Text] Reccntly, what might be called a
"
Buildirg. Altllough assuming a low
has been whip-
. "Komoto Whiriwind
profile, tie is still making positivc
= ping through the LDP, and as a result
moves. Hcnce, there are signs of a
various moves are under way to re-
strain it. One of them is a proposal to
growing confrontation betwcen the
bring the mainstream Ohira and Ta-
Kornoto group and the anti-Komoto
alliance as they head for tlie electioii
; naka factions into reconciliation with
this autumn tn choose the party leader
- tlte anti-mainstream Fukuda faction;
who will automatically become the
that is, to unify the so�called con-
prime minister.
- servative mainstream into a single
The man who is takuig the lead in
entity.
; Also, there is a gro:ving move
reorganizing the mainstream factions
into a single group is anot}ier lone wolf
~ within the Nakasone faction, which is
and a party elder, Kyutaro Nemoto. A
Iagy,ing far behind Komoto in re-
~
faithful disciple of the late Prime
cruiting party members, to
Minister Slugeru Yos}iida, N-emoto
persuade Michio Watanabe
believes tliat in the present situation,
(former minister of agricul-
the emergence of a Komoto regime
ture and f ishery) , previously
under the inlluence of ex-Prime Min-
expelled from the f.action, to
ister Miki is likely, a development
"
which might lead to the disintegration
return
of the LDP.
In addition, the Group ' 80,
Nemoto's mainstream reorganiza-
organized by lone wolves with-
tion effort is based on the same
_ in the LDP, such as Sunao
concept as that at the time of the Miki
. Sonoda and Tokusaburo Kosaka,
government. The Fukuda and Oliira
" are making subtle moves to
factions, which then had a cat-and-dog
, support Ohira. For instance,
relationship, were persuaded into a
�
reconciliation in order to topple Miki.
it has proposed. a moratorium
'
Clearly, behind Nemoto looms the
on the election of the prime
shadow of ex�Prime Minister Tanaka
_ minister in an effort to check
with whom he is closely associated. As
Komoto s advance.
may be expected, Fukuda has so far
- Meanwhile, Komoto, the cyno-
not accepted the reconciliation bid.
sure of political interest,
The Nakasone fac~tion's moves stem
established an office in
from a protective instinct based on a -
earl Februar near the Diet
- y y
sense of crisis. Watanabe, who was
rlier expelled trom
~
_
ie group was
t
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one of its innermost members. At the
time o.f the intra-party feud last year
between the Ohira-Tanaka and Miki-
Fukuda-Nakasone factions, he was ex-
pelled because he went against the
policy of the Nakasone factiun and
votcd for Ohira at the decisive plenary
session.
Bat for Nakasone, now in a dif-
ficult position, with the gap between
him and Komoto greatly widened, it is
clear that he would like to have
Watanabe return. Watanabe is ex-
tremely active and has the confidence
of the younger members of the faction
who are presently conducting a cam-
paign for his reinstatement. If the face
of both parties can somehow be saved,
the return of Watanabe will be only a
matter of time.
The Group `80 consists of, in addi-
tion to Sonoda and Kosaka, ex-Upper
tiouse, middle-of�the�road, non-
faction members such as Michita
Sakata, Toshio Kimura and Asao
Mihara. All of them have wide experi-
ence as cabinet ministers and are lone
wolves with considerable influence in
the LDP. With the exception of
Kimura, who is strictly neutral, the
gruup has a strong pro-Ohira coloring.
It is generally believed within the LDP
that Prime b4inistcr Ohira's tecent
choice of Sonoda as special envoy to
the Middle East was based on his aim
of making Group '80 entirely pro-
Oliira. With the Group `80 having also
proposed, like Fukuda and Nakasone,
a freeze on the election of thc prime
minister, various conjenctures are
being made within the LDP.
Although the objectives of these
various speculative moves may differ,
it is clear that they are being made
with Komoto in mind. Perhaps sensing
these undercurrents within the party,
Komoto himself, although having
opened an office, is assuming a very
low profile and is making every effort
to clieck the rise of anti-Komoto feel-
ings. Depending on the outcome of the
Upper House elections this summer,
these undercurrents might suddenly
rise to the surface and could once
more wreak havoc within the LDP.
COPYRIGHT: Nihon Kagyo Shimbun 1980
CSO: 4120
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ECONOMIC
EXPERT SAYS JAPAN CAN ALLEVIATE INFLATION
Tokyo CHUO KORON in Japanese May 80 pp 90-95
[Article by Masaoki Kojima, member of the Marubeni Executive Board of Di- -
rectors; "Worldwide Inflation Should Not Worry Japanese"]
[Text] There is no cause for fear of inflation, and the future outlook is
not so bleak provided there exists an ample growth potential, high pro-
ductivtty and a vigorous business spirit.
No Inflation Yet
The oil price hike followir.g last spring's revolution in Iran by Ayatoll.ah
Khomeyni and the resultant rise of commodity prices centered on interna-
- tional commodities have led the foreign mass media and Japan's journalism
sector to express some concern over possible stagflation. But my feeling
- is that Japan has not yet reached such a critical stage.
Undoubtedly an inflationary trend exists, for wholesale prices are in the
two digit figures of 21.9 percent (early March) compared to the same period
last year. For consumers, the prices of vegetables have soared, as have
public rates such ae electric power and gas. However, when observing such
- a trend from an overall, international situation, it can be aeen that 100
percent of it is due to inflation abroad--not homemade inflation due to
domestic factors. Thus, I think there is no reason for panic.
Some financial institutions and other quarters are apparently extremely
worried over the trend of provisional demands. A financial tightening be-
ing required, a policy of high interest rates was adopted, with the official
rate being raised to a historic 9 percent annual.rate. Eut provisional de-
mands are unlikely to be the same as during the first oil panic after the
fall of 1973.
Although there are constant reports of stagflation or inflation abroad as
well as Japanese reference to stagflation in last yearend's "White Paper on
the World Economy," I think that Japan is not yet in difficulty.
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. .
The sole reason is that Japan's economy still has ample potential strength
and a very high level of productivity compared to leading nations such as the
United States and Europe. Thus, my conviction is there is no grounds for
fearing inflation provided Japan's economic efficiency can be sustained at a
high 1eve1.
In the economy of those leading nations, labor productivity has greatly de-
- teriorated. Capital productivity is also low, and there is a lack of zeal
to discover new investment opportunities and create businesses. Such an
econotny and Japan's economy should not be discussed on equal terms.
Assessment of the Fifth Official Rate Hike
The point of controversy--diminishing the interest rate spread between home
and abroad--in Japan's latest invocation of the recent financial policy,
_ namely, the fifth f inancial tightening, makes sense, but there is suspicion _
whether the policy is appropriate as it had been until the fourth official
rate hike.
The recent trend in exports is favorable, including infrastructure-related
plant exports to Middle East nations. Against this, imports have begun to
stagnate. For example, in the case of oil, costly crude oil would have all
been imported by April or May. Judging from the present supply and demand
- for oil, a steep oil price hike should not occur as in the past. Inter-
national commodities, apart from oil, have either declined in price or are
_ in a period of adjustment. An escalation of import prices or in the total
value of imports is somewhat unforeseeable.
From this point of view, there is no reason to increase the interest rates
as far as the international balance of payments is concerned.
Great concern seems to ex:+st over the yen's future or the current trend of
- cheap yen. But there continues to be strong confidence in the yen, and it
is unthinkable that Japan's economy will decline in international competi-
tive power. And as both long-term and short-term investments can be anti-
cipated, it is needless to worry so much over cheap yen.
It would be a problem indeed if wholesale prices were to rise to 20 percent
- or more or for consumer prices to increase rapidly. But it would be wrong
- to discuss Japan's situation in the same context as that of the United
States and Europe. And there would be no need for Japan to fo:Llow the
anti-inflation policies of other nations.
Differences Compared to U.S.-European Inflation
When thinking along this line, we must distinguish stagfl.ation in the United
States and Europe from Japan's present ecpnomic trend; otherwis,e, a wrong
picture of Japan's economy or policy may result.
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U.S. President Carter's recent general anti-inflation measures have high-
lighted the problem of improving productivity. Purportedly, the backbone of
this policy consists of a balanced budget, credit restraints, and 10 cents a
gallon oil import tax, but I think the primary objective is the improvement
of productivity. But for America, the extent of aetion has been limited to
creating a committee to deal with the most crucial productivity advancement
issue. _ On the other hand, in Japan, the theme of productivity advancement has been
virtually neglected within the general anti-inflation policies. Although
the Ohira Cabinet's anti-inflation policies, namely, the third commodity
price measures, make references to research and development investments,
innovations and improvement of economic efficiency, they have all been
positioned so that they will be ignored. In reverse, this attests to
Japan's so-called economic energy or industrial vitality.
Looking back to times of fairly deep inflation, the savings propensity in
Japan never declined to any great extent. It is inconceivable that the
Japanese would resort to actions similar to those of consumers in the United
States and Europe. In this sense; a health state is maintained.
Further, a apecial characteristic in this latest oil crisis is that much has
- been learned from the previous, initial oil shock.
In the previous panic, the companies, out of responsibility to supply oil,
effected huge purchases of elementary raw materials, only to see the prices
fall after mid-1974 and suffer a great loss. Such an experience now serves
as a brake, curbing hoarding and sales cutback. This can be seen in the
_ current aituation bv the moderate increase in the producer goods stock and
distributors' stock. In that sense, it is no longer possible to lay away
a huge inventory. It may be said that the policy of high interest rates
is working effectively. This was true up until the fourth official rate
hike, but excessive restraints in the fifth stage might create a problem of
stifling the zeal of businesses.for plant investments for purposes of
rationalization and technol.ogy reform.
Unlike in the previous panic, the consumers have not shown any pathetic
behavior. Consumers no longer are buying up three or six months' supply of
toilet paper. In 1973 and 1974, wages also climbed 30 percent or more in keeping with the
inflationary rise, being reflected in higher costs and accelerated price
hike. In the current spring struggle, however, a reasonable hike of 8
percent is being asked. Further, the General Council of Trade Unions of
_ Japan, Japan Confederation of Labor and the Federation of Independent Unions
are placing considerable weigY,t on holding down the prices. Such efforts in
fighting cost inflation represent a valuable lesson gained from the previous
panic.
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_ Avoidance of pathetic actions because of lessons learned from the past and
the continued high level of productivity constitute the strong points of
Japan's economy. Such factors are the reason that Japan, 99.8 percent depen-
dent on foreign oil and the most vulizerable to oil price hike, was able to
recover so quickly.
Low Productivity of Europe ,
Let us discuss productivity a bit more. Last year, I happened to accompany
an investment mission on an inspection tour of the three Benelux countries
of the Netherlands, Belgium end Luxenbourg. The purpose was to investigate
the possibility of investments, at the prodding of the other side for speedy
investments by Japan. We made many observations and heard stories about
their plants, but the chief difference was their very high rate of ab-
senteeism. The nozmal rate of absenteeism was said to be 10 percent. Thus.
for a plant requiring 100 employees, 110 persons were needed at all times. -
Such a situation is not limited to just the Benelux countries. Known as
the English disease, it is common throughout the European nations. This"
phenomenon is witnessed also in the United States.
' Abaenteeism is the reason for much of the low labor productivity. Generally,
the morale of workers in Europe and the United States is low and is a major
reason for inflation turning into stagflation.
Lately, European and American organizations have shown a great interest in
the Japanese form of management. One reason for this is that European and
American business management have been observing the aspect of high morale
and productivity. leading to the charge of "workaholic" in direct contra-
diction to absenteeism.
In Japan, both management and workers are aware that the term "industry"
is derived from the word "i