Local economies hollowed-out further under Koizumi Cabinet

The Koizumi Cabinet's "structural reform" policy is one of serving the interests of large corporations. Its centerpiece has been the quick write-off of bad loans held by major banks. But the measure has cut off small- and medium-sized businesses and encouraged large corporations to promote corporate restructuring business tie-ups.

Ailing economies everywhere

A Cabinet Office survey in March shows mounting complaints arising from business people in many localities.

"Local businesses are in great difficulties due to declining orders from large corporations which are closing down or consolidating plants and re-positioning their personnel as part of corporate restructuring." (Kita-kanto district)

"As large corporations speed up the write-off of bad loans on their hands, related or affiliate companies are often forced to reduce or close down their business, causing job cuts." (Tokai district)

"With more companies moving their production abroad, we find it extremely difficult to receive orders due to the lower overseas costs." (Kyushu district)

The hollowing-out of industry caused by the increased transfers of production bases abroad by large corporations has caused declines of small-and medium-sized enterprises which have been support base of local economies.

The Japan Chamber of Commerce and Industry, an influential business organization, conducted a survey concerning regional deindustrialization and published the results in an interim report in June 2002. The report shows that the adverse effects were hardest felt in the Tohoku district (84 percent), followed by the Hokuriku-Shin'etsu district (73 percent). Other affected districts included Kanto, Chugoku, and Shikoku districts in that order.

Increasing vacancies in office buildings in large cities

Not only rural areas but business districts of large cities are feeling averse effects of the "structural reform" policy. According to Miki Shoji company, an office buildings broker, the percentage of vacancies at office buildings to the total area of rooms for rent is rising.

In February 2003, the percentage of vacancies in Tokyo's five business areas (Chiyoda, Chuo, Minato, Shinjuku, and Shibuya wards) rose sharply to 7.99 percent, almost twice the figure for December 2001. The company commented, "The economy is still affected by large corporations' streamlining and restructuring."

A survey by the Development Bank of Japan shows a substantial decline in investment related to urban infrastructure.

Investments in urban railways will decline by 21.9 percent from last year due to cuts in new railway construction and extension. Investments in real estate in the metropolitan areas will decline by 13.7 percent, and the large development projects in these areas have peaked. The Koizumi Cabinet's slogan of "urban revival" is shaking at its root. (end)