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Friday, May 25, 2007

AKIYAMA HOOKED REGION ON PUBLIC WORKS

Kankeiren chief leaves a booming Kansai in debt


Staff writer

OSAKA — When Yoshihisa Akiyama steps down as head of the Kansai Economic Federation (Kankeiren) next Monday, he will leave behind a booming Kansai economy thanks to the federation's focus on greater trade with China.

News photo
Yoshihisa Akiyama KYODO PHOTO

But at the same time, the region is awash in debt for public works projects that Akiyama and other federation leaders pushed for during his eight years as head of the powerful business lobby. Kankeiren got these projects funded despite concerns that they were not economically viable. Doubts were voiced by local politicians and business leaders, citizens groups, residents, and even people in the Finance Ministry.

Akiyama, who is also the chairman of Kansai Electric Power Co., has long been one of the most powerful business leaders in the Kansai region. As head for eight years of Kankeiren, of his main jobs was pushing the group's economic agenda with the bureaucrats in Kasumigaseki and politicians in Nagata-cho.

Akiyama has done an excellent job in this area, particularly in getting the central government to pay for a second runway at Kansai International Airport.

When Akiyama became head of the federation in 1999, the Finance Ministry was seriously considering canceling funding due to insufficient traffic at the airport. Foreign airlines also opposed the project, worried it would mean higher user fees at what was already the world's most expensive airport to land at.

But with Akiyama's strong political connections in Tokyo, a second 4,000-meter runway will open in August, despite continued doubts about whether it is necessary.

Akiyama's political influence was felt locally in 2000 when he helped get current Osaka Gov. Fusae Ohta, the nation's first female governor, elected. She won after "Knock" Yokoyama resigned in 1999 over his groping of a female employee in the back of a van during his election campaign.

"Senior Kansai Economic Federation leaders hated Yokoyama, an independent politician and former comedian. They were concerned that Kansai's relationship with Tokyo would get worse with Yokoyama in power. They wanted a replacement who would appeal to voters but who also had good political connections in Tokyo," said a member of Kankeiren, who spoke on condition of anonymity.

Ohta had been vice governor of Okayama Prefecture and was close to Prime Minister Ryutaro Hashimoto, who was from Okayama, and to former Liberal Democratic Party kingpin Hiromu Nonaka, who hails from neighboring Kyoto Prefecture. Both men were influential. She had also worked for the then Ministry of International Trade and Industry (now the Ministry of Economy, Trade and Industry), making her, in the eyes of federation leaders, the perfect candidate for the job.

The federation may have valued Akiyama for keeping the money flowing from Tokyo into Kansai area projects, but not everyone admires him.

Younger business leaders, particularly in the manufacturing and service sectors, see Akiyama as representative of the old guard in business and politics.

"Akiyama ran a local utility company (Kepco) and had a limited understanding of the global economy. His association with rightwing politicians like Yasuhiro Nakasone and Shinzo Abe (recent keynote speakers at Kansai Economic Seminars) also made those of us with business connections in China uncomfortable," said Kenzo Imade, an Osaka-based international business consultant.

While Kankeiren worked closely with local governments on Osaka Prefecture's bid for the 2000 G8 Summit and the city of Osaka's bid for the 2008 Olympics (both bids lost), local politicians also have criticized Akiyama and the federation for pressuring them to approve tax money for a number of Kankeiren-backed construction projects.

Under Akiyama, the Kankeiren has continued to pushed heavily for Kansai to become the "Gateway to Asia." Despite repeated assurances from Akiyama and other federation officials that the region was not ignoring the rest of the world, some people have felt the Kankeiren was too focused on Asia.

"Akiyama and the Kansai Economic Federation leaders showed little enthusiasm for expanded trade with North America and Europe but lots of enthusiasm for trade with East Asia, especially China," said one Western diplomat in the region. "They see U.S. and European firms as competitors for both the Japanese and Asian markets, whereas the Chinese are seen as customers, not competitors."

Overall, the focus has paid off for the region. Kansai's total trade, combining imports with exports, in 2005 was 24.3 trillion yen, according to the Ministry of External Trade and Industry's Kinki bureau. In 1999, when Akiyama became federation chief, that figure was only 16.6 trillion yen.

However, total trade with North America had decreased to 3.2 trillion yen in 2005 from 3.6 trillion yen in 1999, while trade with China rose to 6.0 trillion yen in 2005 from 2.5 trillion yen in 1999.

China has become Kansai's No. 1 trading partner. The neighboring country accounts for about 18 percent of all regional exports and 32 percent of regional imports in 2005. Just over 16 percent of Kansai exports go to the U.S, the region's second-largest trading partner, but only 9 percent of Kansai's imports are from the U.S.

Akiyama's successor, Hiroshi Shimozuma, the chairman of Sumitomo Metal Industries, has said he will continue to promote Kansai's relations with Asia, but will do some things differently. His comments to the media have indicated that he is less inclined to get Kankeiren involved in the big public projects that Akiyama did.

"The purpose of Kansai Economic Federation is not to be a company that plans and manages different projects," Shimozuma said in April.

However, after years of big construction projects, its not certain the Kankeiren is ready for such a big change.



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