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RUCNDT/USMISSION USUN NEW YORK 3750

UNCLAS SECTION 01 OF 08 TOKYO 001379 
 
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 03/29/07 
 
 
INDEX: 
 
(1) Futenma relocation: US consul general shows understanding on 
offshore shift 
 
(2) US consul general shows understanding on offshore installation; 
A step to break deadlock; Okinawa Prefecture, Nago City appreciate; 
Defense Ministry coolheaded 
 
(3) Regulatory reform panel determines seven-item agenda, keeping 
Abe's policy imprint in mind 
 
(4) Deregulation generates 140,000 yen in economic effect per capita 
over 15 years 
 
(5) Japanese economy on smooth track: Belated recovery of personal 
consumption seen with baby-boomers gradually loosening their purse 
strings 
 
ARTICLES: 
 
(1) Futenma relocation: US consul general shows understanding on 
offshore shift 
 
OKINAWA TIMES (Page 1) (Full) 
March 29, 2007 
 
Kevin Maher, US consul general in Okinawa, expressed his views 
yesterday on the issue of building an alternative facility in a 
coastal area of Camp Schwab in Nago City for the US Marine Corps' 
Futenma Air Station. Okinawa Prefecture and Nago City have been 
seeking to install the planned facility at a site in waters 
southwest of the camp. "We will fully consider local views and will 
determine the relocation plan while understanding that we need to 
place it toward the ocean as much as possible (dekiru dake okiai ni 
yoseru)," Maher told reporters at the US Consulate General in Urasoe 
City, Okinawa Prefecture. Nago's municipal government and Okinawa's 
prefectural government welcome Maher's remarks on the issue. If the 
Japanese government shows a similar view officially, its talks with 
Okinawa and its local communities over Futenma relocation will 
likely be accelerated. 
 
Maher clarified that the United States, when working out a 
masterplan to build the Futenma alternative facility, would consider 
Nago City's request to install it in waters southwest of the 
currently planned relocation site. However, Maher stressed that it 
does not mean revising the Futenma relocation plan. It is unclear 
whether the construction site will be actually changed to an 
offshore site. 
 
"A US government official in charge made remarks that shows 
understanding on our request, so I think our proposal can get the 
government's understanding in our talks with the government from now 
on," Nago Mayor Yoshikazu Shimabukuro said. "This is a big step 
forward," the mayor added. 
 
Gov. Hirokazu Nakaima took the position that he would have to nail 
down whether Maher stated his personal views or not. However, 
Nakaima gave high marks to Maher's remarks, saying, "That's what 
Okinawa Prefecture and local communities want." 
 
Concerning the alternative facility, Maher noted that Japan and the 
United States released an interim report in 2005, incorporating an 
 
TOKYO 00001379  002 OF 008 
 
 
intergovernmental agreement on the planned realignment of US forces 
in Japan. In this regard, Maher said the Japanese and US governments 
agreed at that time to minimize noise and other impacts on local 
residents. He stressed that his views clarified this time do not 
mean to change the United States' stance. Meanwhile, the governor 
has been calling for Futenma airfield to be turned into a state of 
closure within three years. "It's difficult to close down Futenma 
airfield in three years," Maher said. He went on: "It would be 
better to speed up the Futenma relocation as much as possible. We're 
ready to make efforts to dissolve the concerns of local residents 
living near the airfield as early as possible." 
 
In addition, Maher also referred to the fact that Japan and the 
United States have now finalized a report on the US military's 
realignment, incorporating an agreement to return bases located 
south of Kadena Air Base. "We don't have to wait until the Futenma 
alternative is completed in 2014 and Marine relocation is 
completed." With this, Maher clarified that the United States would 
consider returning some of those bases earlier than scheduled. 
 
(2) US consul general shows understanding on offshore installation; 
A step to break deadlock; Okinawa Prefecture, Nago City appreciate; 
Defense Ministry coolheaded 
 
OKINAWA TIMES (Page 3) (Full) 
March 29, 2007 
 
On the issue of relocating the US Marine Corps' Futenma Air Station 
in Okinawa Prefecture, US Consul General in Okinawa Kevin Maher has 
indicated that the United States would consider the request of local 
communities to install an offshore alternative facility. Behind the 
scenes, Okinawa Prefecture and Nago City have been seeking to break 
the deadlock in their consultations with the Japanese government 
over Futenma relocation. Okinawa Prefecture appreciates Maher's 
remarks. "It's very wonderful if the Defense Ministry and the 
Japanese government also think that way," one of Okinawa's 
prefectural government officials said. Okinawa Prefecture, which 
frowns on the Japanese government's plan to send in an environmental 
assessment paper at this point of time, is also showing a positive 
posture to accept it. Meanwhile, the Defense Ministry remains 
cool-headed, with one of its officials taking the position that 
Maher did not clearly say the United States agreed to install an 
offshore facility. 
 
Maher's remarks came after certain developments. 
 
Defense Ministry: "The US side will not consent (to shift the 
planned coastal location of a new airfield)." 
 
Okinawa Prefecture: "The US side has only to consent?" 
 
On Feb. 16, the Okinawa prefectural government and the Defense 
Ministry held a meeting of senior officials at the prefectural 
government office. In that meeting, Okinawa Prefecture endorsed Nago 
City's request to shift a V-shaped pair of airstrips to an offshore 
site in waters southwest of the currently planned relocation site. 
However, the Defense Ministry side rejected the Nago-proposed idea 
of installing an offshore facility, saying, "The current plan is 
best." 
 
On March 19, Consul General Maher, Okinawa Gov. Hirokazu Nakaima, 
and Nago Mayor Yoshikazu Shimabukuro met at a hotel in the city of 
Naha. In that meeting, an official from the Okinawa prefectural 
 
TOKYO 00001379  003 OF 008 
 
 
government stressed that the danger of Futenma airfield to local 
residents in its vicinity and the noise problem must not be carried 
over to the relocation site in the city of Nago. This official 
added, "Relocating Futenma airfield without destroying the daily 
lives of local communities in Nago will lead to ensuring the 
feasibility of Futenma relocation and securing the new facility's 
stable operation." With this, Okinawa Prefecture pressed Maher to 
have Nago's request reflected in determining the newly planned 
airfield's detailed location. 
 
On March 11, Maher also met in Okinawa Prefecture with Defense 
Minister Fumio Kyuma, who has shown a flexible posture to Nago on 
the issue of Futenma relocation. Okinawa Prefecture has expectations 
for Maher, with one of its officials saying the consul general was 
one of the working-level officials when the bilateral agreement was 
reached on Futenma relocation. 
 
The Defense Ministry remains coolheaded about Maher's remarks. One 
of its officials said, "The consul general said the US government 
would consider local residents, but he didn't clearly say it's okay 
to install the Futenma alternative out at sea." The official added: 
"His understanding is the same as ours, and he only said what's a 
matter of course. 
 
The focus is now on whether or not to reposition the newly planned 
airfield. The foregoing Defense Ministry official said the Defense 
Ministry, with an eye to modifying the construction plan, would 
create a preparatory document based on the governor's statement in 
the process of going through procedures for an environmental 
assessment. "Right now," the official added, "I can't say anything 
with my prediction (about whether to reposition the relocation 
site)." 
 
The relocation site's offshore shift will destroy the environment, 
such as the seaweed beds. An environmental assessment survey, if 
implemented for data, is therefore likely to result in finding a 
negative impact on the natural environment. 
 
Maher recounted that his remarks did not mean a revision of the 
Futenma relocation plan. An Okinawa prefectural government official 
remains calm, saying, "We're not asking them to revise the plan." 
Nago City is calling for the relocation site to be positioned within 
the framework of the bilateral agreement. If the Japanese government 
and Nago City coincide with each other in their respective 
interpretations, Okinawa Prefecture may soften its attitude even 
though the relocation plan is not revised. 
 
Gist of US Consul General Maher's remarks 
 
The following is a gist of US Consul General Kevin Maher's remarks 
regarding the planned construction of an alternative facility for 
the US military's Futenma airfield. 
 
-- What about the Futenma alternative facility? 
 
Maher: When the Japanese and US governments decided on where to 
locate the runways in the so-called interim report that was released 
in October 2005, the two governments agreed to minimize its impact 
on the environment and to ensure operational capability, considering 
and analyzing factors that will not cause any negative impact on the 
daily lives of local residents. We fully considered the local 
request to install the Futenma alternative at a site that is as far 
away from populated areas as possible and to place it toward the 
 
TOKYO 00001379  004 OF 008 
 
 
ocean as much as possible, and we're thinking of determining the 
relocation plan while understanding that we need to do place it 
toward the ocean as much as possible. It would be better to carry 
out the intergovernmental decision. 
 
-- Will the US government consider the relocation site's offshore 
shift before the environmental assessment? 
 
Maher: In my view, this is not the question of whether to revise the 
plan as the media says. I think the two governments are fully in 
consideration of local views. I think it would be better to carry 
out the legally required environmental assessment early so that we 
can carry out this plan as early as possible. We still can't say 
anything about what will come out of the environmental assessment. 
What I want to stress is that we are going to determine the plan 
while understanding that we need to place it toward the ocean as 
much as possible. 
 
-- When do you expect the masterplan? 
 
Maher: We still have to coordinate details. The plan is almost 
complete. I don't know when it will be made public. However, we need 
to coordinate with the Japanese government. 
 
-- Is your view this time shared by Japan and the United States? 
 
Maher: It's my interpretation. It's the US government's view. I 
don't know what has become of the Japanese government's view. That's 
up to the Japanese government. However, the two governments showed 
their ideas in the agreed interim report. 
 
(3) Regulatory reform panel determines seven-item agenda, keeping 
Abe's policy imprint in mind 
 
NIHON KEIZAI (Page 3) (Slightly abridged) 
March 29, 2007 
 
The government's Regulatory Reform Council (RRC) (chaired by Nippon 
Yusen K.K. Chairman Takao Kusakari) yesterday started working out a 
first package of recommendations due out in May. It first decided 
seven agenda items, including regional revitalization and assistance 
for a second-chance program, and then began mapping out specific 
measures. The panel, selecting the seven items, gave priority to the 
viewpoint of market functions and coordination with the priority 
policies put forth by Prime Minister Shinzo Abe. But the package, in 
a sense, lacks showcase measures. The prime minister's backup will 
be imperative for the panel to accelerate its regulatory reform 
drive again. 
 
Key lies in prime minister's support 
 
Acting Chairman Tatsuo Hatta, professor at International Christian 
University, said in a press conference held after an RRC meeting 
yesterday: "Deregulation may result in expanding the existing social 
disparity, but its major purpose is to bring in those who remain 
unable to join new businesses." He thus stressed that deregulation 
would contribute to creating new markets and job opportunities. 
 
Keeping in mind the criticism of the existing social discrepancy 
from opposition parties and others, the deregulatory panel has come 
up with measures in wider-ranging areas, such as employment, 
welfare, and child-rearing. 
 
 
TOKYO 00001379  005 OF 008 
 
 
In reviewing the employment conditions in the public sector, the 
panel plans to study raising the age of eligibility to take civil 
servant examinations. Hatta said in the press conference: "We keep 
in mind the age of women who have finished child-bearing so that 
they find it easier to get a new job." 
 
The deregulation drive has apparently lost steam since the Abe 
administration was launched in September of last year. The prime 
minister has distanced himself from the stance of only giving 
priority to market-based principles, remarking, "There are 
regulations that should be retained in light of keeping the people's 
livelihood stabilized." In education reform, which the cabinet 
positions as its top priority challenge, too, the report represents 
a willingness to have the central government involved more in boards 
of education. 
 
Concerned about its shrinking profile, the RRC keeps in mind the 
need to have its measures linked to the priority policies set forth 
by the prime minister, focusing on Abe's policy identity. The RRC 
has decided to finalize the first package of recommendations in 
mid-May and to have such recommendations reflected in the 
government's three-year regulatory reform promotion plan covering 
the period FY2007-FY2009 due out in mid-May. Afterward, the panel 
plans to come up with a final report, possibly by the end of this 
year. 
 
In the course of discussion, contradictions might appear between 
measures to promote thorough competition without restrictions and 
such pending issues as correcting social disparities. Chairman 
Kusakari indicated his confidence in a press conference, remarking, 
"The report includes many showcase measures." The report, however, 
covers the agriculture and medical areas, on which negotiations 
often stood at a standstill due to opposition from the Liberal 
Democratic Party and for other reasons. 
 
With an eye to the House of Councillors election in July, the ruling 
parties are now sensitive to the intentions of industrial groups and 
relevant government agencies. Many RRC members take the view that it 
might be difficult to produce results without the prime minister's 
backup. 
 
(4) Deregulation generates 140,000 yen in economic effect per capita 
over 15 years 
 
NIHON KEIZAI (Page 3) (Full) 
March 29, 2007 
 
The Cabinet Office yesterday released its survey that concluded that 
the regulatory reform measures taken during the FY1991 - FY2005 
period boosted the economy by approximately 18.3 trillion yen. The 
report underscores the benefits of deregulation also reach consumers 
through price drops and market expansion. The economic effect per 
capita is calculated to be 144,000 yen.  An official of the Cabinet 
Office commented, "By promoting reform further, more benefits will 
be generated for consumers." 
 
The Cabinet Office calculated how many economic benefits were 
generated through regulatory reforms in 14 areas, including 
electricity and city gas. Upon working out the added value of "price 
cuts owing to expedited competition" and "expanded demand for goods 
and services (market expansion)," the survey compared the total 
figure with that worked out on the assumption that no deregulatory 
measures were taken. The total figure of economic effect increased 
 
TOKYO 00001379  006 OF 008 
 
 
by 3.8 trillion yen over that in the previous survey in FY2002. 
 
In value terms, the electricity industry showed the largest economic 
effect. This result is attributed to the measure taken in 2004 to 
expand the scope of liberalization of retail sales, as well as the 
improvement in the wholesale exchange market for surplus 
electricity. Compared with FY1994, electric prices dropped 39.1% on 
average, and the market expanded by 18.6%. 
 
The trucking industry followed the electricity industry, generating 
the economic impact of approximately 3.43 trillion yen. In 2003, the 
government eased rate-setting regulations to enable entities to 
change transport charges on their own judgment. Market-entry 
regulations were also relaxed. Transport rates dropped 27.5% in 
FY2004 from FY1990 levels. 
 
In regulatory reform in the financing area, the government took 
measures to completely liberalize commissions and fees in stock 
brokerage and non-life insurance rates. In particular, the first 
measure contributed to increasing individual investors, helped by 
the spread of the electronic securities market. 
 
In the cellular phone business, the price of a unit in FY2005 was 
down 60% below in FY1993. The market expanded 20 times larger. The 
deregulation measures taken so far generated 2.78 trillion yen worth 
of economic effect. However, since major reforms have already been 
carried out, a significant effect has not appeared recently. 
 
In domestic air service and liquor sales, there is no significant 
effect observed. Compared with the prices when regulatory reform 
started to be carried out, the rate of decline stayed at only 8.8% 
and 11.6%, respectively. In domestic air service, due to an increase 
in demand for short-distance flights increased (less than 600 
kilometers in distance), for which higher passenger fares are set, a 
negative economic effect in price terms has been produced. 
 
(5) Japanese economy on smooth track: Belated recovery of personal 
consumption seen with baby-boomers gradually loosening their purse 
strings 
 
NIHON KEIZAI (Page 1) (Slightly Abridged) 
March 28, 2008 
 
The economy is on a mild but stable growth track. Consumption and 
capital spending are following a steady path, but there are 
potential risks about their future, including uncertainties about 
the US economy. The underlying strength of domestic demand holds the 
key to the sustainability of the longest economic boom in post-war 
decades. 
 
Shortage of boats in stock 
 
Baby-boomers have begun spending money for their post-retirement 
interests. Customers in their late fifties have visibly increased on 
the digital single-lens reflex camera sales floor at Yodobashi 
Camera Multimedia Akiba in Chiyoda Ward, Tokyo. A half of the 
customers who visit there on weekend are baby-boomers. Though many 
are beginners, cameras in the price range between 100,000 yen and 
130,000 yen for intermediate users sell well. According to BCN, a 
research company based in the Bunkyo Ward, Tokyo, the sales of 
digital single-lens reflex cameras had remained on the same level as 
the preceding year up until last summer, but a 60% -70% increase 
over the previous year is continuing since last September. 
 
TOKYO 00001379  007 OF 008 
 
 
 
President Koichi Hattori of Hattori Marine, a boat shop in Yasu 
City, which deals with used boats, expressed his surprise, "The 
shortage of boats to sell will likely continue. The number of 
baby-boomers who want to enjoy fishing when they retire is sharply 
increasing. 
 
Personal consumption is beginning to pick up. The Bank of Japan's 
indices of aggregated sales gauging consumption from an overall 
perspective took an upward turn in January. One factor for the rise 
is increased consumption among baby-boomers. A household economy 
survey carried out in January found that expenditures by households 
headed by those in the 55-59 age bracket increased for the first 
time in seven months. 
 
The baby-boomer population born from 1947 through 1949 is 
approximately 7 million. They have potential to have a major impact 
on the economy. Goldman Sachs estimated that the total amount of 
retirement allowances paid in the fiscal 2007-2009 period, when this 
generation hit retirement age, would reach 13.9 trillion yen per 
year, up 2.5 trillion yen over the average amount paid in the past 
10 years. A large part of their retirement allowances will likely be 
put aside as savings to pay living expenses or as investment in 
investment trust funds, but the remaining portion will be spent. 
 
Aeon set its eyes on their changing wardrobe in preparation for post 
retirement life. It in mid-March carried out a campaign to take 
unwanted suits from customers in exchange for 10% discount tickets, 
which they can use when they buy casual clothes. 13,000 suits were 
brought in to Aeon stores during the three-day campaign period. The 
sales of jackets and pants jumped 70%, compared with the previous 
year. 
 
Wages hold key 
 
Young people's consumption has also begun moving, as their purses 
are getting fat due to the recruitment of many college graduates, 
raises in their initial salaries and wages for part-timers. Both 
Royal Host and Sky Lark, family restaurants with many young 
customers, saw an increase in per-customer spending in fiscal 2006. 
 
Will consumption continue to pick up smoothly? There remain some 
unclear elements. One is a sluggish increase in wages. Though the 
overall income of wage earners has increased at a pace of over 1% on 
average since 2005, per-capita income or cash earnings have not 
increased. Per-capita income in January suffered a drop for the 
second straight month, marking a 1.4% fall in comparison with the 
preceding year. Taro Saito at the Nissei Basic Research Center said 
that the rise in consumption thus far has been led not by wage 
increases but by an increase in the number of people who got into 
the workforce thanks to the upturn in the employment situation. 
 
However, there are signs of wages increasing. According to the first 
aggregation of wage negotiations in the spring of 2007, which the 
Japan Business Federation (Nippon Keidanren) compiled on Mar. 22, 
the rate of wage hikes reached 1.85%, up 0.16 points over the same 
period of the preceding year. 
 
An increase in the number of permanent employees will boost 
consumption due to heightened expectations on stable income. In one 
labor force survey, the average number of permanent employees in the 
October-December quarter last year increased by 590,000, compared 
with the same quarter the year before, topping an increase in the 
 
TOKYO 00001379  008 OF 008 
 
 
number of part-timers. An increase in interest earnings from the 
payment of dividends and interest rate hikes are also boosting the 
household economy. 
 
The spillover effect of the current economic growth on the household 
economy has been very mild, unlike a boom in the corporate sector. 
However, the income level of the household economy is gradually 
increasing, even though the growth occasionally comes to a 
standstill. If this trend continues, it would become possible to 
declare that personal consumption has recovered. 
 
SCHIEFFER