Japan panel eyes autumn boom

Spending to rebuild Japan's tsunami-hit northeast will spark an economic boom later this year, generating revenues that can be used to redeem reconstruction bonds and reduce the need to rely on long-term debt, the head of a government advisory panel said. Makoto Iokibe, chairman of the Reconstruction Design Council, also called for a mass consolidation of ports along the coast to boost the fishing industry and aggressive investment to make the region a pioneer in renewable energy development. The panel will deliver its first set of recommendations by the end of the month, setting the direction for the country's biggest rebuilding effort since the years after the Second World War, estimated to cost up to 20 trillion yen (Dh918 billion). "We should carry out the kind of reconstruction that helps the Tohoku [northeast] region emerge hopefully as a leader vibrant enough to drive the whole Japanese economy. That's our basic stance," Iokibe told Reuters in an interview. Three months after the massive March 11 earthquake and tsunami hit, triggering the world's worst nuclear disaster in 25 years, the government is under fire for slow progress in coping. Securing funds for the rebuilding effort is a major challenge for the government with public debt already twice the size of its $5 trillion (Dh18 trillion) economy and rating agencies threatening to downgrade its credit due to the cost of reconstruction. "If the second supplementary budget is enacted in summer, full-blown construction activity starts in autumn, driving reconstruction-related demand," Iokibe said late on Friday. "Politicians are leaning towards issuing bonds for reconstruction, but we should not just pass our debt on to future generations. Reconstruction bonds will lead to reconstruction-related demand and an economic boom. Then you can collect." While Iokibe did not comment on specifics, the panel has in past meetings discussed income, corporate and sales taxes as candidates for hikes to pay back borrowing for reconstruction. The magnitude-9.0 earthquake and tsunami hit the country's northeast on March 11, leaving more than 23,000 dead or presumed dead and causing the world's worst nuclear accident since Chernobyl in 1986. To revitalise the region's fishing industry, more than 200 ports should be consolidated and major ports equipped with piers for large deepsea fishing ships, seafood processing facilities and a distribution centre need to be established, Iokibe said. "It has the world's best fishing ground. Its rice and fruits have a reputation overseas as a bit on the pricy side but high in quality... It is important not just to restore Tohoku's strengths, but to boost them further as Japan's cutting-edge brands." The Tohoku region, host to Tokyo Electric Power's tsunami-crippled Fukushima Daiichi nuclear power plant, should also position itself as a pioneer in solar and other renewable energy sources, he said. That would fit with the strategy unveiled by Prime Minister Naoto Kan last month in which he called for renewable energy to be a key pillar of Japan's energy policy, with its commitment to nuclear power to be reviewed from scratch. This week the mayor of Minami Soma, 25km from the Fukushima plant, said he wanted to rebuild his city into a renewable energy hub by placing solar panels on top of rice paddies that were devastated by the March quake and tsunami. Despite more than 8,000 people still missing in northern Japan and the nuclear crisis still unresolved, the government has been distracted by political bickering. Kan last week survived a no-confidence vote by offering to resign once the country has overcome the worst of the crisis, prompting lawmakers to focus on who would replace him and diverting attention from dealing with the crisis. Iokibe, also president of the National Defence Academy, called for politicians to set aside their differences. "As expressed in the phrase ‘noblesse oblige', political leaders are supposed to be noble and carry out responsibility in line with the national interest. They must not put their own political lives and party interests first in the face of a national crisis." "It would be desirable to form a grand coalition [of the main parties] to solve such issues as sale tax [increases] for social security in one swoop." Talk of a coalition has surfaced, only to run into snags. A separate government panel last week recommended doubling Japan's sales tax in stages over the next four years to help pay for rising social security costs, although Kan's looming resignation and instability in his ruling party cast doubt over whether the policy will be implemented. From / Gulf News