VZCZCXRO3503
OO RUEHFK RUEHGH RUEHKSO RUEHNAG RUEHNH
DE RUEHOK #0093/01 1470322
ZNR UUUUU ZZH
O 270322Z MAY 09
FM AMCONSUL OSAKA KOBE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1396
INFO RUEHKO/AMEMBASSY TOKYO PRIORITY 8517
RUEHKSO/AMCONSUL SAPPORO PRIORITY 0273
RUEHNAG/AMCONSUL NAGOYA PRIORITY 2403
RUEHFK/AMCONSUL FUKUOKA PRIORITY 0265
RUEHNH/AMCONSUL NAHA PRIORITY 0293
RUEHBJ/AMEMBASSY BEIJING 0459
RUEHUL/AMEMBASSY SEOUL 1163
RUEHSH/AMCONSUL SHENYANG 0080
RUEHGH/AMCONSUL SHANGHAI 0050
RUEHGZ/AMCONSUL GUANGZHOU 0026
RUEHHK/AMCONSUL HONG KONG 0221
RUEHGV/USMISSION GENEVA 0017
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAUSA/DEPT OF HHS WASHDC

UNCLAS SECTION 01 OF 03 OSAKA KOBE 000093 
 
SENSITIVE 
 
SIPDIS 
 
HHS FOR OGHA 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KFLU SOCI TBIO PINR JA
SUBJECT: H1N1 Kansai Economic Bell Begins to Toll 
 
¶1.  (SBU) Summary: As the spread of H1N1 and official 
countermeasures to the flu outbreak in Kansai continue to 
evolve, it is too early to calculate the full impact of 
the H1N1 flu virus on the Kansai economy, but as local 
governments and business organizations struggle to sweep 
away the perception of Kansai as a "contaminated zone," 
preliminary information on the economic costs are 
starting to emerge, including one economist's estimate of 
USD784 million in losses. Local officials, in 
consultation with the central government, prioritized 
preventing wider spread of H1N1 in their initial 
responses, but that choice had specific economic effects. 
The timing of the H1N1 outbreak, for example, coincided 
with the peak school excursion tourist season to Kyoto 
and Nara and naturally, many schools cancelled their 
excursions to Kansai.  Hotels, sports events, amusement 
parks, movie theaters, airlines, railways, travel 
agencies and retailers have all seen downturns.  Should 
the current outbreak expand, extend into the fall or 
mortality rates increase, long term economic effects 
likely will also increase.  Future outbreaks elsewhere 
are likely, if not inevitable, but decision makers 
seeking to implement tempered responses that consider 
both short and long term objectives will benefit from a 
better understanding of how public attitudes and official 
responses toward the H1N1 outbreak in Kansai shaped 
economic losses.  End Summary. 
 
¶2.  (SBU) Japanese officials acted quickly and 
aggressively to contain the spread of the H1N1 virus in 
Japan, but the decisions to close schools, warn citizens 
about traveling to North America, discourage domestic 
travel to and from Kansai and encourage people to wear 
face masks in public had a broad and negative impact on 
travel, trade, tourism and consumption in the region.  As 
new scientific information regarding mortality rates and 
contagiousness of H1N1 became available, some have 
criticized officials for failing to quickly re-evaluate 
H1N1 countermeasures on the basis of science.  Even while 
acceding to the central governments request to close 
Osaka schools near areas of confirmed cases of H1N1, 
Osaka Governor Toru Hashimoto spoke of the need to 
balance policies necessary to identify patients, provide 
health services and to stop the spread of the virus 
without causing an unnecessary economic and social shut- 
down. 
 
------------------------- 
Criticism of Overreaction 
------------------------- 
¶3. (SBU) A May 23 Mainichi Shinbun editorial 
characterized Japanese society's reaction to H1N1 as an 
overreaction and criticized media organizations for 
failing to question whether government authorities' 
measures such as requiring H1N1 patients to stay in 
hospitals, shutting schools and cancelling public events 
were appropriate.  Noting that Hyogo Prefecture closed 
all of its schools at the behest of the central 
government, Hyogo Governor Toshizo Ido subtly criticized 
the Ministry of Health Labor and Welfare (MHLW), 
suggesting that the ministry should have sought to 
minimize the negative impact on society by more rapidly 
reviewing its policies and adjusted them to meet the 
situation of an H1N1 flu outbreak similar to normal 
influenza.  Ido also noted that Kobe City and Hyogo 
Prefecture maintained separate communications with the 
national government which resulted in inconsistent 
implementation of countermeasures.  Kobe, for example, 
opened all of its general hospitals and clinics to 
patients suspected of having H1N1, but the prefecture 
directed suspect cases to a limited number of designated 
flu clinics.   Ido suggested that greater control and 
coordination at the prefectural level would have been 
more effective. 
 
OSAKA KOBE 00000093  002 OF 003 
 
 
 
------------------------------------------ 
Initial Estimate USD 784 million in Losses 
------------------------------------------ 
¶4. (SBU) Even after taking into account increased sales 
of medicine and face masks,  Kansai University's School 
of Economics Professor Katsuhiro Miyamoto estimates that 
the economic cost to the Kansai region will be 
approximately 74.5 billion yen (USD784 million), 
sufficient to lower the GDP of the four prefectures of 
Osaka, Kyoto, Hyogo, and Shiga by 0.1 percent.  Local 
business executives have begun to complain about 
uninformed overreactions by local and central government 
officials.  Osaka Chamber of Commerce and Industry Chair 
Akio Nomura commented that with 23 percent of its member 
companies seeing reduced sales, the impact on the local 
economy is much more serious than he had anticipated. 
Kyoto, Osaka, and Kobe Chambers of Commerce and Industry 
requested that local governments arrange emergency loans 
for local businesses and requested that the Japan Chamber 
of Commerce and Industry issue a call to member companies 
to renew usual business trips to the Kansai region. 
 
¶5. (SBU) The public perception of increased risks of 
exposure to H1N1 through travel to or during daily 
commutes in Kansai and the countermeasures put in place 
to contain the spread of the virus caused reductions in 
consumer sales, revenues and short-term profitability for 
the region's businesses. For Kansai's hotels and ryokan, 
Japan's traditional inns, the economic toll has been 
significant as numerous visitors, events and conferences 
have been cancelled. 
 
-- Though it has now been rescheduled for mid-summer, the 
annual three-day Kobe Festival which last year drew 
460,000 visitors initially was cancelled. 
 
-- A three-day conference of the Japanese Society of 
Anesthesiologists in Kobe scheduled for May 22-25 at 
which some 12,000 participants had been expected to 
participate. 
 
-- According to the Japan Travel Bureau (JTB), 
cancellations of package tours by Tokyo area residents to 
Kansai rose significantly between May 16 and May 18. 
 
-- On May 22, the Kansai branch of the Japan Ryokan 
Association asked the central government for emergency 
financial assistance for its 195 member ryokan in 
Kansai's six prefectures, citing losses of Q4.3 billion 
(USD 45.3 million) from 362,000 cancellations at member 
ryokan for the period ending May 19. 
 
-- Kyoto usually hosts 500,000 tourists each spring, but 
Kyoto officials say more than 50,000 tourists have 
cancelled trips this year.  Direct losses for these 
cancellations are estimated at 1.2 billion yen (USD12.6 
million). 
 
-- JR West announced on May 23 that it had seen a 7 
percent reduction in ridership. 
 
-- Eva Air announced it will temporarily cease operation 
of its flight between Los Angeles and Kansai 
International Airport from June 15 to October 24. 
 
-- Thai Airways announced that for the next several 
months, it will reduce the frequency of its flight 
between Kansai International Airport and Bangkok. 
 
------------------------------ 
School Excursion Cancellations 
------------------------------ 
¶6.  (SBU) Late May and early June are popular seasons for 
 
OSAKA KOBE 00000093  003 OF 003 
 
 
junior high and high school students to visit other 
regions of the country, but many schools cancelled their 
planned excursions to Kansai this year due to fears of 
H1N1.  As of May 21, 600 schools cancelled school 
excursions to Kyoto, while Nara recorded 466 
cancellations as of May 25.  The decision of some schools 
to self-quarantine students returning from visits to the 
Kansai region has not helped perceptions, nor have 
limitations on travel by students from Kansai to other 
regions of Japan.  Over the weekend, Osaka Governor Toru 
Hashimoto came out in opposition to the Osaka Municipal 
Board of Education's decision to cancel all events in 
which Osaka students would be traveling outside the city. 
Hashimoto announced his view that the "once in a 
lifetime" school excursions for Osaka's students to other 
regions of Japan that were cancelled at over 50 schools 
should be rescheduled as soon as possible. 
 
¶7.  (SBU) Signs of consumer panic have become visible in 
the form of illicit internet trading of prescription-only 
Tamiflu.  As Japanese stores have run out of face masks, 
single masks have been selling on the street for Y500 
(USD 5), and internet offers of face masks at significant 
price increases have appeared as have instructions for 
making masks at home out of coffee filters.  A worker at 
one twenty-four hour convenience store in Nara told us 
that each night for the past week a woman, in her sixties 
has appeared around midnight to await the delivery of 
face masks and buys them all. 
 
¶8.  (U) Hyogo and Osaka Prefectures have begun discussing 
supplementary budgets to pay for the extraordinary H1N1 
outbreak expenditures, to assist local businesses with 
losses due to the related downturn and to promote 
regional tourism post H1N1.  Already fiscally stretched, 
the two prefectures may in the end seek central 
government assistance. 
 
DONG