Analysis: Japan election points to return of "construction state"

Tue Dec 11, 2012 5:09pm EST
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By Tetsushi Kajimoto

NAGANOHARA, Japan (Reuters) - A big winner from Japan's December 16 national elections may be the country's construction industry and towns such as Naganohara, where a sprawling dam development sits unfinished after more than four decades.

Polls show the election is likely to return to power the long-dominant Liberal Democratic Party (LDP), which has promised to boost public works and talks of spending 200 trillion yen ($2.4 trillion) on projects over the next decade -- about 40 percent of Japan's economic output.

Many economists are troubled by the plan. Japan already has the heaviest public debt load in the industrialized world and they note that similar public works programs in the past 20 years have done little to counter the economy's long stagnation.

But it is music to the ears of construction industry executives, who saw public works budgets slashed by a third by the incumbent Democratic Party of Japan (DPJ), and has already boosted the stocks of builders such as Kajima Corp, Taisei Corp and Obayashi Corp.

It would also be a boon for communities like Naganohara, which count on government investment to help the local economy.

"We have been made a fool of by the Democrats, which opposed the dam for the sake of opposing whatever the LDP had promoted," said the town's mayor Kinya Takayama. "Most local residents want the LDP back."

Japan's Democrats stopped the $5.6 billion project after they won power in 2009 promising to switch focus "from concrete to people," but later backtracked, faced by the high costs of killing it off despite doubts whether the dam was really needed.

Half-finished bridges, ramps and roads now stand as a symbol of Japanese politicians' long addiction to concrete and a short-lived push to kick the habit.   Continued...

Bridge piers built at a construction site of Yanba Dam stand in Naganohara, Gunma Prefecture in Naganohara, Gunma Prefecture December 3, 2012. REUTERS/Tetsushi Kajimoto