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UNCLAS SECTION 01 OF 10 TOKYO 000691 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA 
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST 
DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS 
OFFICE; SECDEF FOR JCS-J-5/JAPAN, 
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA 
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY 
ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. 
 
E.O. 12958: N/A 
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA
SUBJECT:  DAILY SUMMARY OF JAPANESE PRESS 02/07/06 
 
 
INDEX: 
 
(1) Poll: 74% see income gap as widening 
 
(2) Interview with constitutional research commission chairmen 
from LDP, New Komeito, Minshuto; LDP to formulate second draft 
constitution in latter half of the year, New Komeito to come up 
with proposals to add to the Constitution, Minshuto to sort out 
amendment proposals for the public 
 
(3) Japanese, US governments drawing fire over discontinued US 
beef imports 
 
(4) Americans less interested in anti-BSE measures; USG still 
enjoying consumer confidence 
 
(5) US security unit chief Maher, US Embassy official responsible 
for USFJ realignment states that without relocation of Futenma, 
reduction of Marines not possible 
 
(6) Editorial: Gov't must explore strategy for Iraq-based GSDF 
troops to exit with applause 
 
(7) Shaky Japan-US-China relations - the light and shadow of 
Koizumi diplomacy (Part 5): Foreign Ministry cringes, unable to 
determine attitude toward China 
 
(8) Entire picture of reorganization of government-affiliated 
financial institutions: Yen loans to be integrated into JICA in 
reforming ODA system; JBIC to be dismantled 
 
ARTICLES: 
 
(1) Poll: 74% see income gap as widening 
 
ASAHI (Page 1) (Full) 
February 4, 2006 
 
A total of 74% of the public think the income gap in Japan is 
expanding. Among them, 70% see problems about such a trend. A 
total of 81% feel uneasy about being pinched for money. In the 
meantime, a total of 58% have a sense of resistance to the trend 
that is dividing society into winners and losers. Such public 
awareness of disparities and money stood out in a mail-based 
nationwide public opinion survey conducted by the Asahi Shimbun 
from December last year through January this year. In the survey, 
respondents were also asked if they thought competition would 
heighten vitality. In response to this question, "yes" accounted 
for 60%. In addition, respondents were further asked if they 
thought Japan was a society where it is impossible to recover, 
and "no" accounted for 60%. As seen from these figures, the 
general public is taking a positive view of competitive society 
in itself. 
 
The Diet is also debating economic disparities in society in 
connection with Prime Minister Koizumi's structural reform 
initiatives. In the survey, respondents were asked if they 
thought the income gap was widening. In response to this 
question, 74% answered "yes," with 18% saying "no." Among those 
who answered "yes," 69% regarded the widening of the income gap 
as a problem. Similarly, 51% of all respondents saw the widening 
of the income gap as problematical. 
 
 
TOKYO 00000691  002 OF 010 
 
 
In the breakdown of those thinking the income gap was widening, 
males accounted for 77%, and females 71%. Males in their 40s and 
males in their 50s accounted evenly for 83%, topping all other 
age brackets. Those not satisfied with their household income 
have strong feelings about it. 
 
In the case of those thinking the widening of the income gap was 
a problem, 54% of them ascribed the gap to factors other than 
individual capability and diligence. Among those seeing no 
problem about the widening of the income gap, 72% attributed it 
to individual capability and diligence. 
 
As far as money is concerned, 3% thought of themselves as 
winners, while 21% categorized themselves as losers. A total of 
72% answered that they did not belong to either group. 
Respondents were also asked if they had a sense of resistance to 
such dichotomy. In response, "yes" accounted for 58%, with "no" 
at 35%. 
 
In the survey, respondents were also asked about competition. "Do 
you think if competition will heighten social vitality?" This 
question drew "yes" from 59%. They were further asked if they 
thought Japan was a society where they could not recover once 
they fell behind. In response to this question, 60% answered 
"no." 
 
(2) Interview with constitutional research commission chairmen 
from LDP, New Komeito, Minshuto; LDP to formulate second draft 
constitution in latter half of the year, New Komeito to come up 
with proposals to add to the Constitution, Minshuto to sort out 
amendment proposals for the public 
 
YOMIURI (Page 4) (Full) 
February 7, 2006 
 
The ruling Liberal Democratic Party (LDP), its coalition partner 
New Komeito, and the main opposition party Minshuto (Democratic 
Party of Japan) will continue internal debate on a revision of 
the Constitution this year, as well. How far have their 
constitutional debates been boiled down? 
 
LDP Constitutional Research Commission Chairman Hajime Funada: 
 
The LDP released its draft constitution last November. Some 
assume, however, that the pace of speed to expedite 
constitutional debate might slow down because of the formulation 
of the draft constitution. Our task for this year is to maintain 
enthusiasm among party members on the draft constitution. We want 
to hold symposiums in 11 regional blocs across the countries. 
 
In an attempt to maintain a mood of expectation about 
constitutional reform, we would like presidential candidates to 
talk about their views on Article 9 of the Constitution, as well 
as on the rights and obligation of the people during their 
campaigns for the September presidential race. The new 
president's opinion will affect constitutional debate in the LDP. 
 
We expect to hear views not only from Diet members but also from 
rank-and-file LDP members. We want to redefine the rights and 
obligations of the people in the draft constitution so that 
public cooperation with the government will be highlighted. This 
means to formulate a second draft constitution. We want to hammer 
out the definition of the right to collective self-defense in the 
 
TOKYO 00000691  003 OF 010 
 
 
process of discussing a fundamental law on national security. 
 
New Komeito Constitutional Research Commission Chairman Akihiro 
Ota: 
 
With an eye on the fall this year, the New Komeito will work out 
a set of proposals for the Constitution in some form. We would 
like to come up with our draft constitution before constitutional 
debate begins after a bill to hold a referendum on a revision of 
the Constitution clears the Diet. The commission will hold as 
many meetings as possible so that it will boil down views in the 
party. 
 
The common perception among the people is that the present 
Constitution is excellent. The continuity of the principles of a 
constitution is important. Since the people decide on a 
constitution through voting, the process for creating a 
constitution should be careful. Our party's position is as 
follows: the three basic principles of the Constitution -- 
popular sovereignty, respect for fundamental human rights, and 
pacifism -- should be firmly upheld; and the first paragraph (war 
renunciation) and second paragraph (not possessing military 
power) of Article 9 should be also kept intact. Our party then 
calls for adding such new rights as an environment right and 
privacy right to the existing rights. If possible, we would like 
to stipulate them in an article. Regarding Article 9, we are now 
discussing as to whether the existence of the Self-Defense Forces 
(SDF) and ways of international contribution should be added to 
the present Constitution. Many people see our party as "peace 
party" that thinks a great deal of Article 9. We take that image 
seriously. 
 
Minshuto (Democratic Party of Japan) Constitutional Research 
Commission Chairman Yukio Edano 
 
It is not necessary to discuss all subjects in constitutional 
reform all at once. Subjects on which a national debate is over 
and an agreement is reached at the Diet should be first 
discussed. 
 
We have finished discussions on a review of the security, 
decentralization, and the cabinet system. The set of proposals 
our party presented last October was too long in terms of 
quantity. Therefore, we want to sort out them so that the public 
will find it easy to judge or discuss them. 
 
Setting aside the question of whether it is right to call it 
"itemization," which (President Seiji Maehara took a position of 
looking into), it is irresponsible to call on the public to read 
it all. 
 
I want party headquarters to host symposiums in 11 regional blocs 
nationwide. 
 
(3) Japanese, US governments drawing fire over discontinued US 
beef imports 
 
ASAHI (Page 4) (Full) 
February 7, 2006 
 
The public is growing increasingly distrustful of the 
government's steps to deal with US beef imports. The cabinet 
released a statement last November saying that the government 
 
TOKYO 00000691  004 OF 010 
 
 
would inspect US meatpackers before resuming beef imports, but 
the government failed to do so. 
 
Japanese Communist Party Executive Committee Chairman Kazuo Shii 
pointed out the irresponsibility of the Japanese and US 
governments, saying: 
 
"In resuming exports to Japan, the US neither had an intention to 
abide by a set of requirements, such as removing specified risk 
materials, or rules. In addition, Japan had no serious intention 
to conduct inspections." 
 
Minshuto (Democratic Party of Japan) Secretary General Yukio 
Hatoyama also criticized the government, noting: 
 
"The US was sloppy, but the Japanese government, which failed to 
detect its sloppiness, was sloppier than the US. The government's 
premature decision to resume imports was clearly wrong." 
 
Hatoyama also revealed his party's plan to continue pursuing the 
government's accountability as one of the most serious issues in 
Diet question-and-answer sessions on the fiscal 2006 budget that 
stared yesterday. 
 
Meanwhile, Liberal Democratic Party Upper House Secretary General 
Toranosuke Katayama shrugged off the opposition bloc's call for 
the resignation of Agriculture, Forestry and Fisheries Minister 
Shoichi Nakagawa. But Katayama also commented, "Japan has to 
check the procedures thoroughly before resuming imports." 
 
(4) Americans less interested in anti-BSE measures; USG still 
enjoying consumer confidence 
 
NIHON KEIZAI (Page 7) (Full) 
February 6, 2006 
 
Since the Japanese government imposed a second ban on US beef 
imports, the sloppiness of the safety procedures being taken by 
the US to prevent BSE has been in the spotlight. American 
consumers, however, have shown little interest in the beef safety 
issue. Speculation is that the difference in reactions of 
Japanese and American consumers is attributable to differences 
between the two countries in media coverage of the BSE problem 
and in consumer confidence in government handling of food safety 
issues. 
 
Japan decided to re-impose a ban on US beef imports on Jan. 20 in 
reaction to the discovery of backbones, designated as a specific 
risk material (SRM), in a US beef shipment to Japan. At that 
time, leading US newspapers and TV news took up Japan's decision, 
but few have made follow-up reports. The US Department of 
Agriculture (USDA) released on Feb. 2 an inspectors' report on 
anti-BSE measures pointing out the sloppiness of management at 
most of the 12 meat-processing facilities in the US inspected. 
The report cited that nine facilities, three-fourths of them, did 
not properly keep records on SRM removal. All Japanese newspapers 
covered the USDA report in evening editions on Feb. 3. 
 
In contrast, leading American newspapers did not give prominently 
coverage to the story. The Washington Post and the Wall Street 
Journal on Feb. 3 gave inside-page play to the report, but the 
New York Times and USA Today ignored the story. A major trading 
house spokesman said: "There has been no major change" in demand 
 
TOKYO 00000691  005 OF 010 
 
 
for US beef, "even after Japan's re-imposition of a ban." Michael 
Hansen, a member of the Consumers Union, a major American 
consumer group critical of Washington's anti-BSE measures, 
commented: "Many consumers in the US have little interest in anti- 
BSE measures, so the US media have not prominently covered the 
issue. ... Even so, it is not true to say that the American 
people's interest in food safety is low." For instance, in the 
US, given that the volume of tuna consumed has skyrocketed due to 
the recent sushi boom, more attention has been paid to the issue 
of mercury-tainted large-size fishes and shellfishes than in 
Japan. 
 
The Food and Drug Administration of the US issued notice earlier 
than Japan warning that pregnant women should limit the intake of 
large fishes and shellfishes. The Chicago Tribune carried an 
article concerning an investigation report on mercury- 
contaminated tuna late last year. An executive of a leading US 
meatpacker grumbled: "I wonder why only beef has become the focus 
of attention in Japan." 
 
David Roppek (TN: phonetic), a lecturer of the Community Hygiene 
Faculty at Harvard University who is an expert on the BSE issue, 
gave this analysis: "The difference in Japanese and American 
consumer confidence in government handling of food safety has 
been reflected in their different reactions to the BSE issue." 
 
The first case of BSE in Japan in the fall 2001 completely 
deprived consumers of confidence in the Japanese government, 
because the government had always said, "Japanese beef is safe." 
The government's continued authorization of the use of meat-and- 
bone meal also undermined consumer confidence in the government 
further. 
 
Meanwhile, the US government has prohibited farmers from using 
meat-and-bone meal four year earlier than Japan. Regarding the 
potential risk of BSE infection in the US, as well, Washington 
has said: "The possibility is low, but it is not zero." According 
to Roppek, when the first case of BSE was reported in the US late 
in 2003, "the US government did not lose consumer confidence and 
prevented a panic because it had taken safety measures several 
years earlier than Japan and also continued to offer necessary 
information." 
 
Americans still place high confidence in USDA-quality-guaranteed 
US beef. Unless a sensational incident, like a discovery of a 
number of BSE-infected cows, takes place, it is likely that 
American consumers will continue to remain calm about the BSE 
issue. 
 
(5) US security unit chief Maher, US Embassy official responsible 
for USFJ realignment states that without relocation of Futenma, 
reduction of Marines not possible 
 
OKINAWA TIMES (Page 2) (Full) 
February 7, 2006 
 
Kevin Maher, the US Embassy in Japan's chief of the security 
unit, who is responsible for US force realignment, briefed 
reporters in Fukuoka City yesterday on the realignment report. He 
said: "The relocation of Futenma Air Station and realignment as a 
whole are a package. If the relocation is not carried out, it 
would not be possible to lessen the security burden, including 
reducing 7,000 Marines stationed in Okinawa." 
 
TOKYO 00000691  006 OF 010 
 
 
 
Maher stressed, "Just reducing will lead to weakening the US- 
Japan alliance." "I would like to ask the residents of Okinawa 
Prefecture for their calm consideration and understanding," he 
added. 
 
However, Maher also referred to the opposition of Governor 
Keiichi Inamine and Nago City to the plan to relocate Futenma to 
the coastal portion of Camp Schwab, as agreed by the Japanese and 
US governments: "There will likely be some technical changes by 
the time the final report comes out in late March." He indicated 
a flexible stance toward such revisions as the specific site for 
the relocation and the direction of the runway. 
 
Turning to the US Marine Corps' Iwakuni base (Yamaguchi 
Prefecture), which is to be the site for the relocation of 
carrier-borne jets no at Atsugi Air Station (Kanagawa Pref.), he 
explained: "Iwakuni, being close to North Korea, is a strategic 
point for military units rapidly responding to a contingency in 
the Far East. The decision to transfer carrier jets there will 
make response more effective by integrating the operations of the 
US Marines and Navy." 
 
(6) Editorial: Gov't must explore strategy for Iraq-based GSDF 
troops to exit with applause 
 
SANKEI (Page 2) (Full) 
February 4, 2006 
 
The government is now reportedly preparing to complete the 
withdrawal in May of Japan's Ground Self-Defense Force troops 
currently deployed in the southern Iraqi city of Samawah. 
 
British and Australian forces, tasked with Samawah's public 
security, are planning to pull their troops out of Iraq this 
spring. In that case, the government is worried about how to 
ensure the safety of the Samawah-based GSDF personnel. This seems 
why the government is preparing to recall the unit. 
 
If that is the case, however, we cannot but wonder if the GSDF 
troops will be applauded by the Iraqi people and the 
international community as they leave. 
 
The GSDF's program of Iraq reconstruction assistance is now in 
its third year. In Samawah, the GSDF has been hiring up to 1,100 
locals a day, offering jobs like repairing public facilities. The 
GSDF wrapped up its water supply as water purifiers went into 
operation. However, the GSDF remains on its missions, such as 
repairing schools and roads. In mid-January, findings from a poll 
of local residents in the province of Muthanna, where Samawah is 
situated, were released. According to the poll, 66% do not want 
the GSDF to pull out this year. As seen from this figure, a 
majority of local communities there want the GSDF to continue its 
reconstruction aid. 
 
If the GSDF unilaterally discontinues these job offerings and 
assistance projects, its withdrawal might be fraught with risk. 
 
The government has already pledged a total of 5 billion dollars 
in aid for Iraq reconstruction. Japan has already distributed or 
decided on grant aid amounting to 1.5 billion dollars. Japan also 
aims to provide yen loans equivalent to 3.5 billion dollars. Iraq 
probably wants Japan to continue its assistance with such loan 
 
TOKYO 00000691  007 OF 010 
 
 
aid. The government should explore an exit strategy in order to 
facilitate such local coordination. In the beginning there was 
nothing. The government said, "Let there be a withdrawal 
schedule, and there was a withdrawal schedule." That is probably 
not the case. 
 
The problem is that Self-Defense Forces personnel on overseas 
missions may use weapons to protect themselves but are not 
allowed to engage in public security. This is because the 
government interprets the act of fighting back when involved in a 
battle as falling under the use of force, prohibited by the 
Constitution of Japan's Article 9. However, the constitutionally 
prohibited use of force as a means of settling international 
disputes is for aggressive wars. Article 9 is also interpreted as 
not prohibiting Japan from participating in the United Nations' 
policing. 
 
The government, however, does not recognize this interpretation. 
Japan does not accept even the United Nations' global standard 
rules of engagement that allow using armed force to repel armed 
attacks disturbing the execution of duties. As it stands, Japan 
is a far cry from being a country acting in concert with the 
international community and fighting against terrorism. 
 
In his recent policy speech before the Diet, Prime Minister 
Junichiro Koizumi said, "Japan will assist Iraq with its nation- 
rebuilding efforts as a responsible member of the international 
community." Japan should be able to ensure such resolve. That is 
the job 
of the premier, isn't it? 
 
(7) Shaky Japan-US-China relations - the light and shadow of 
Koizumi diplomacy (Part 5): Foreign Ministry cringes, unable to 
determine attitude toward China 
 
MAINICHI (Page 2) (Almost full) 
February 3, 2006 
 
"Even if you tell me not to visit, I will do so." So Prime 
Minister Junichiro Koizumi revealed his intention to continue 
visiting Yasukuni Shrine during a meeting with President Bush on 
Nov. 16 at the Kyoto State Guesthouse. 
 
This conversation was excluded from a press release, thereby 
leaving Ministry of Foreign Affairs (MOFA) officials feeling 
impotent. "Such a statement from the prime minister," a senior 
MOFA official lamented, "made us feel that there is no role for 
us to play." 
 
Three weeks later, an essay written by former Ambassador to the 
United States Takakazu Kuriyama, 74, appeared in the New Year's 
issue of the MOFA-affiliated journal Gaiko Forum. The essay 
created a stir among foreign policy watchers at home and abroad, 
because Kuriyama, who also served as vice minister, defined his 
position as "not supporting the prime minister's visits to 
Yasukuni Shrine," albeit with conditions attached. 
 
Beginning with this line, "My assertions do not stem from a 
masochistic view of history," and based on the conviction that 
acknowledging the mistakes of the past would help strengthen the 
moral standpoint of the nation, the long essay urges the 
necessity of rapprochement with neighboring countries. The 
journal carried the essay in two installments - one in its New 
 
TOKYO 00000691  008 OF 010 
 
 
Year's issue and one in its February issue. When asked what 
compelled him to write it, Kuriyama said: 
 
"Japan's nationalism appears to be getting out of control. I'd 
like those who are in responsible positions in the political 
world to be aware of this point." 
 
Many in the Foreign Ministry, though, are furious with Kuriyama's 
essay or perplexed by it. One official said, "I feel like we've 
been stabbed in the back." Another official noted, "It'd be 
troublesome if the public regarded it as the ministry's 
position." Prime Minister Koizumi, who has seen his clout grow 
since winning a landslide victory in last fall's Lower House 
election, has authority over every government office in 
Kasumigaseki, to say nothing of his Liberal Democratic Party 
(LDP). MOFA has become notably nervous about the Yasukuni issue. 
The general consensus right now among MOFA officials is that the 
less is said, the better. 
 
"Wasn't it the liberals and the pro-China officials like Kuriyama 
who created the causes of the criticism heaped on the Foreign 
Ministry today?" So asked a ministry official who has lost hope 
due to a string of unfavorable incidents involving the ministry, 
including the misappropriation of secret diplomatic funds, the 
ministry's inappropriate links to House of Representatives member 
Muneo Suzuki, and public criticism of the inefficient and opaque 
official development assistance (ODA) policy. 
 
The so-called China school (the diplomats who received Chinese 
language training in MOFA) have been criticized for bringing 
about the diplomatic stalemate with China. Until recently the 
position of director of MOFA's China and Mongolia Division had 
essentially been reserved for members of the China school. But 
MOFA is likely to appoint someone outside of the group to the 
post for the first time in 32 years this spring. 
 
This appointment is said to reflect the strong desire of 
Administrative Vice Foreign Minister Shotaro Yachi, who aims to 
shape a resolute foreign policy full of great aspirations. Some 
in the China school welcome this appointment as a good 
opportunity to break the impasse, but some are objecting to it, 
suggesting that Yachi may be trying to blame the group and should 
be aware of the harsh views on the matter heard even in the 
United States. 
 
There is also a story behind the selection of an ambassador to 
China. Back on October 11, 2005, late in the day, former LDP 
Secretary General Hiromu Nonaka, who has enjoyed the strong 
 
SIPDIS 
confidence of the Chinese government, and Ambassador to China 
Koreshige Anami were both invited to the Diaoyutai Guest House in 
Beijing and dined with Vice President Zeng Qinghong, Chinese 
Communist Party Central Committee member Zhao Qizheng, and other 
Chinese officials at a special room for state guests. 
 
At the time, back in Japan, a plan to choose Ambassador to 
Indonesia Yutaka Iimura, who studied French, to replace China 
school alumnus Anami was being discussed. In the dinner party, 
however, Zhao made this comment: "It's not a good idea to select 
a person who isn't good at Chinese at a time when relations are 
so chilly." Set off by this remark, Japan gave up on the idea and 
instead of Iimura, chose Ambassador to Okinawa Yuji Miyamoto, who 
comes from the China school. Iimura has been informally 
designated as ambassador to France. 
 
TOKYO 00000691  009 OF 010 
 
 
 
This choice of ambassador to China may be seen as a well-balanced 
selection in that it reinforces a firm stance toward China while 
keeping open a channel for dialogue. But some have criticized it 
as a manifestation of MOFA's drift between foreign policy and 
domestic politics due to its inability to chart a roadmap for 
diplomacy toward China. 
 
(8) Entire picture of reorganization of government-affiliated 
financial institutions: Yen loans to be integrated into JICA in 
reforming ODA system; JBIC to be dismantled 
 
NIHON KEIZAI (Top Play) (Slightly abridged) 
February 4,2006 
 
The overall picture of privatization and integration of 
government-affiliated financial institutions was firmed up 
yesterday. The government's expert council, which has looked into 
ways to reform the official development assistance (ODA) system, 
will issue a recommendation report late this month. The report is 
expected to include a policy of separating the yen loans section 
and the international financing section from the Japan Bank for 
International Cooperation (JBIC) and integrating the yen loan 
function into the Japan International Cooperation Agency (JICA), 
which is in charge of technical cooperation under the ODA system. 
The international financing section will be integrated into a new 
entity into which four public financial corporations will be 
unified. The JBIC will be specialized in corporation 
revitalization and investment activities. For the time being, it 
will not engage in the banking business. 
 
The government's study group on external economic cooperation 
(chaired by Akio Harada, former attorney general) has proposed 
the breakup of the JBIC. There has been a call to maintain the 
independence of the JBIC, but the proposed plan is aimed to 
establish an efficient ODA implementing system, by integrating 
reimbursable financial cooperation (yen loans) and technical 
cooperation. The Foreign Ministry will continue to be responsible 
for grant aid. 
 
A huge financial institution in charge of broad-based business 
operations will come into existence, if the international 
financing section of the JBIC is integrated into an entity to be 
newly created, combining four existing government-affiliated 
financial institutions. 
 
The government plans to introduce to the current Diet session an 
administrative reform promotion bill, which sets basic guidelines 
for the privatization and integration of public financial 
institutions. It will aim to get through an extraordinary Diet 
session likely to be convened this fall a set of policy financing 
reform bills that set concrete proposals for the management form 
of the new organization. 
 
As a vehicle to be in charge of the planning and formulation 
function of the ODA system, a cabinet council responsible for 
compiling comprehensive aid strategy at the initiative of 
politicians will be newly established under the Cabinet. The 
prime minister will chair the panel, and its member will consist 
of the chief cabinet secretary, the foreign minister, the finance 
minister and the minister of economy, trade and industry. The 
Foreign Ministry will continue to play a leading role in the 
selection of specific project items. 
 
TOKYO 00000691  010 OF 010 
 
 
 
JBIC will not engage in banking business after privatization: It 
will instead be specialized in investment and loan business 
 
The JBIC has started considering business activities after 
privatization in fiscal 2008 with a view to being specialized in 
the investment and loan business and not pursuing the banking 
business for the time being. With a view to getting listed on the 
Tokyo Stock Exchange, the bank will boost earning power, by 
concentrating its resources on business areas in which it has 
experience, including extending loans for corporate 
revitalization and the consolidation of social infrastructure. It 
intends to appoint management personnel from the private sector 
in preparation for competition with private companies. 
 
The JBIC's outstanding investment and loan balance as of the end 
of Mar. 2005 stood at approximately 14 trillion yen. The number 
on the payroll is 1,300, which is smaller than leading regional 
banks, which employ around 3,000. Its view is that it would be 
difficult to do business with petty enterprises and individual 
customers as regional banks do. Since it is absolutely necessary 
to invest an enormous amount of money into the building of a 
computer system in order to take part in banking operations, it 
will not go into this business for the time being. Chances are 
that since it will not deal with banking and trade account 
settlement operations, it may not obtain a bank license. 
 
The JBIC will focus its business operations on highly profitable 
areas, targeting existing customers, such as leading companies, 
mid-tier companies and local governments even after privatization 
so as to constrain business cost. In specific terms, the bank 
will focus its business operations on assistance for corporate 
revitalization, in which it will invest in seriously troubled 
companies so as to gain on sale of their shares once they are 
regenerated, and assistance for privatization of public sectors, 
including water-supply services. 
 
It will procure resources for investment and loans from private 
banks or through the issuance of corporate bonds. It could face 
an increased procurement cost, as it will lose state guarantee 
after privatization. At present, it only issues ten-year bonds 
with state guarantees, but it intends to issue 15-year bonds 
before the end of fiscal 2006. It thus plans to secure long-term 
funds in view of fund management shortly after privatization. 
 
The JBIC will work out a basic privatization plan and explain 
details to investors possibly in late February. 
 
SCHIEFFER