Hard times spark rare, fiery debate at annual Kansai Economic Summit

by Eric Johnston

OSAKA — For the past four decades, the Kansai region’s business leaders have gathered annually in February to discuss a variety of local economic issues.

In recent years, however, the Kansai Economic Summit had generally become a dull, dreary affair in which the pursuit of consensus and harmony had taken precedent over serious discussion of controversial issues.

Not this year.

On Feb. 7 and 8, summit participants battled publicly over issues ranging from Kansai airport and the airport currently under construction in Kobe to the very structure of the local business community.

Osaka business officials berated their Kobe counterparts for pursuing the Kobe airport project and criticized Osaka Gov. Fusae Ohta for her reported lack of leadership.

They also proposed merging the city of Osaka and Osaka Prefecture into a single entity, and questioned the probity of abolishing the very organization that was sponsoring the summit.

The Kobe airport issue has, for many years, caused bitter divisions within the Kansai business community.

Last month, Ohta stated publicly that the number of airports serving the Kansai region should be reconsidered, a maneuver that crystallized the anger of both Osaka and Kyoto toward Kobe’s intransigent pursuit of the airport project, which is scheduled to be completed in 2005.

Many in the Kansai business community have spent the last few years fuming quietly while Kobe has gone on building its one-runway, domestic airport despite massive public opposition toward the development.

But with a growing number of carriers having pulled out or cut back on their flights to Kansai airport last year — a period when construction of a second runway at the airport was already under way — Kansai business officials discovered suddenly that the Finance Ministry was reluctant to continue funding the project.

Following a bitter funding battle last year, the ministry appropriated only enough for basic construction to continue and ordered Kansai airport to cut costs.

Yet the Kobe airport project, funded almost entirely by local bonds, has continued unabated.

“For the amount of money being spent on Kobe airport, another two or three runways could be built at (Kansai airport),” remarked Kazuaki Tsuda, vice president of Suntory and an official at the Kansai Association of Corporate Executives, at the end of the conference.

“We cannot understand why Kobe continues to insist on building its own airport.”

Kansai executives opposed to the Kobe airport project had received unexpected support from Chikage Ogi, minister of land, transport and infrastructure.

Ogi said on Feb. 8 that there was no need for three airports in the Kansai region — Itami airport in Hyogo Prefecture, Osaka’s former main airport, being the other — and suggested it was time to review the Kobe project.

The public attacks at the seminar caught Kobe officials off guard.

Hiroshi Oba, chairman of the Kobe Chamber of Commerce and Industry, would not comment directly on remarks made by Ogi or Tsuda, but said he is convinced the airport is necessary.

“Kobe is developing into a biotechnology center, and the airport is a vital infrastructure project,” he said.

Kansai economic officials also claimed that Ohta had failed to provide adequate leadership, especially with regard to the region’s battle with the central government over funding for Kansai airport.

“When I look at Tokyo Gov. Shintaro Ishihara, or Mie Gov. Masayasu Kitagawa, I realize Osaka needs a strong leader as well,” Tsuda said.

Ohta, who replaced “Knock” Yokoyama in 2000 after he resigned in connection with his conviction for sexual harassment, was reportedly furious with the Kansai business community after learning the full extent of the financial and structural problems plaguing Kansai airport.

Many local business officials have said they don’t expect her to run again when her current term expires next year.

The summit ended with another surprise — a proposal to merge the administrative functions of the city of Osaka with those of the prefecture.

While informal discussions along these lines have been taking place between business and government leaders for several years, this year’s summit marked the first time the idea has received a public airing.

Proponents claim the proposal — sure to be opposed by the city — is a necessary measure to allow the region to compete with Tokyo on a more efficient basis.

Opponents of the scheme, who are numerous within Osaka City Hall, claim that creating a super city will inspire more bureaucratic headaches than it solves.

Nor was seminar talk of consolidation and reduction limited to airports and municipal authorities.

West Japan Railway Chairman Masataka Ide caused a stir on the second day of the conference when he publicly called for consolidation of the main business organizations in Kansai. His proposal included the merger of the Kansai Association of Corporate Executives with the Kansai Economic Federation (Kankeiren).

“The whole Kansai region is sinking economically,” he said.

“The local business community has to change its ways, and in order to recover, it’s necessary to restructure the business community organizations.”

Several major firms, including JR West, are reportedly threatening to resign from the Kansai Association of Corporate Executives unless it places itself under the umbrella of Kankeiren.

Tsuda and other association members admitted that pressure to consolidate is mounting, but defended the association’s role, saying that a large number of its members perceive the organization’s role as a worthwhile one.

In addition, some seminar participants voiced fear that a merger with Kankeiren, which is currently dominated by firms that include Kansai Electric Power Co. and Sumitomo Metal Industries, Ltd., would leave smaller corporations now prominent in the association with little say.

Regardless of the outcomes of the various proposals on the table, however, veteran summit participants said they felt a logjam of sorts had been broken.

“For too long, these summits have been lacking in substance,” said a senior member of Kankeiren, speaking on condition of anonymity.

“The horrible state of the Kansai economy, plus central government pressure, has finally forced Kansai executives out of their reluctance to publicly criticize one another.

“This year’s summit finally put an end to such taboos, and I expect full and frank discussions like this, which we never had before, on these issues will continue.”