(For more stories on Japanese politics, click on [ID:nPOLJP])
By Yoko Nishikawa
TOKYO Feb 12 Japan's biggest business lobby is
cautiously reaching out to the main opposition party that may
win power this year, amid fears of a dramatic shift in policies
that some executives worry could erode Japanese
The willingness by Nippon Keidanren to deepen dialogue with
the Democratic Party of Japan (DPJ) is a shift after decades of
cosy ties between the powerful business group and the
long-ruling Liberal Democratic Party (LDP).
Surveys show the 10-year-old Democrats could win an
election that must be held by October, leaving the conservative
Liberal Democrats out in the cold after an almost unbroken
reign of more than 50 years. [ID:nT160473]
That would usher in a government analysts say may craft
policies friendlier to labour unions and consumers rather than
the big corporations that have worked closely with successive
LDP governments to rebuild Japan from the ashes of World War
Such worries are prompting the business lobby to expand
contacts with the Democrats -- a mix of former LDP members,
ex-socialists and younger conservatives.
"Regardless of which party wins the election, we hope that
party will pursue policies to help strengthen Japan's
international competitiveness," Mitsuo Ohashi, who is in charge
of political affairs at Nippon Keidanren, told Reuters.
"It is only natural for us to change the way we treat the
DPJ as chances grow for the party to win and run the
government," Ohashi said. "We will boost our dialogue with the
Nippon Keidanren backs its support for the LDP with cash --
the lobby's member companies gave a total of nearly 3 billion
yen ($33 million) in financial contributions to the party in
2007. The Democrats received just 83 million yen.
And long-standing ties can be hard to break.
While Ohashi addressed a Democrat convention last month,
Nippon Keidanren chief Fujio Mitarai, who is also chairman of
Canon Inc (7751.T), told a similar LDP gathering he hoped the
ruling party would stay in power.
POOR MARKS ON POLICIES
For most of the post-war period, Nippon Keidanren has been
the voice of big business in Japan and wields substantial clout
in the corridors of power. It represents more than 1,300 firms
and nearly 180 industry groups.
It gave poor marks to the Democrats in its annual policy
evaluation of political parties last September, saying the
party's policies lacked specifics, such as how to finance
growing social welfare costs as Japan's population rapidly
"The DPJ has proposed steps that are rather temporary to
attract voters as the election nears," said Ohashi, who is also
chairman of the board at chemical maker Showa Denko KK
The Democrats have not finalised their platform for the
coming election, but have pledged to overhaul the national
budget and break the grip that bureaucrats have over policy.
The business lobby has expressed unhappiness at a Democrat
proposal to keep Japan's corporate tax rate at around 40
percent, one of the highest among major economies.
The lobby also advocates raising the 5 percent consumption
tax to help fund Japan's mounting debt and social welfare costs
-- an idea the Democrats are cautious about, at least for now
ahead of the election and in the midst of an economic crisis.
Labour union support for the DPJ has also prevented a
business lobby led by managers at big Japanese corporations
from getting too close to the Democrats.
That close relationship to unions has some worried.
"If the Democrats run a government that leans toward labour
unions and don't listen to firms' requests to lower corporate
tax, it will be negative for Japan's growth rate," said Kyohei
Morita, chief Japan economist at Barclays Capital.
Political analyst Atsuo Ito, however, played down the role
of labour unions, which are less powerful than those in
countries such as the United States, in swaying Democratic
"Once the DPJ wins and runs a government, financial
contributions from Nippon Keidanren will likely increase. For
corporations, it is very important to work well with a ruling
party at the time," he said.
Despite their cautious approach to the DPJ, the possibility
the LDP could make a comeback even if it loses this time around
will make many businessmen wary of burning their bridges.
"In the future, we may have a two-party system or a
reorganisation of political parties," said Nippon Keidanren's
Ohashi. "Thus, it is important for Nippon Keidanren as well as
the business community to make sure the economy won't be
dragged down by any political mess."
(Editing by Dean Yates)