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40 years after return, Okinawa still struggling to grow up

by Jun Hongo

Staff Writer

First of five parts

When people turn 40, they have reached a milestone age and one that often entails various responsibilities beyond caring just for oneself.

Okinawa marks its 40th year Tuesday since the United States returned the prefecture to Japan. But for Jun Miyagi, Okinawa still has a lot of growing up to do to meet its various challenges.

“Okinawa still has many thorny problems, including the development of its economy and the debate over U.S. bases in the prefecture,” Miyagi, who heads Fukkiko Kyogikai, a group of about 40 Okinawans born in 1972, told The Japan Times last week.

With Okinawa’s jobless rate the highest and average income the lowest out of all prefectures, Miyagi acknowledges Okinawa is still struggling 40 years on.

“We’ve had these issues for a long time, and I think a lot of us aren’t sure how they can be resolved,” he said.

Okinawa’s economic doldrums continue despite its allure as a tourist destination. Questions remain over whether subsidies provided by the central government over the past four decades truly helped the people.

Missing out on Japan’s robust economic growth of the 1960s, earlier stages of support toward Okinawa focused on building infrastructure through special economic measures. For example, the central government has provided subsidies to cover up to 95 percent of the costs for public works projects in the prefecture, whereas other prefectures normally receive about 50 percent.

The prefecture is also given cheaper tax rates on liquor and gas.

Such advantages have been in place since 1972, with a 10-year temporary economic promotion law being renewed for the fourth time last month.

Over the past four decades the central government has poured approximately ¥10 trillion into Okinawa.

Yet Okinawa has little industrially to show for itself, with most people employed in the low-paying services sector.

Manufacturing accounted for just 4.1 percent of the prefecture’s economy, compared with the national average of 17.7 percent in fiscal 2009.

“Okinawa’s return to Japanese rule was supposed to unite it with the rest of the country, but in reality Okinawa’s economy was taken over by businesses from mainland Japan,” said Moritake Tomikawa, former president of Okinawa International University.

But while mainland businesses expanded their presence and competition in Okinawa, the reverse didn’t happen. Local businesses lacked the financial or human resources to engage in significant commerce in other parts of Japan, Tomikawa said. This has created a distorted income for the prefecture.

Okinawa today still relies on U.S. military-related earnings, which make up approximately 5 percent of its economy, while tourism accounts for 10 percent.

The prefecture relies on more than double the central government tax revenues for its budget compared with the national average, or 30 to 40 percent compared with 16.9 percent nationwide in fiscal 2007.

With its businesses lacking a competitive edge, Okinawa’s unemployment rate in 2011 was the nation’s worst, at 7.1 percent. Runnerup Aomori Prefecture was a point better, at 6.1 percent.Fukkiko Kyogikai’s Miyagi questions whether previous public works subsidies truly helped Okinawa stand on its feet.

“The bigger the public works project, the more likely it was that a major construction company from the mainland” would ace out the local company, he pointed out.

This structure doesn’t allow much of the construction costs to profit Okinawa, he added.

While there were upsides to the central government’s Okinawa economic promotion law, including how it helped Okinawa quickly catch up with other parts of the country in terms of building social infrastructure through abundant public works, the government lacked the vision to help local industries grow, even with its groundbreaking measures.

After spoon-feeding Okinawa with lavish economic advantages, the state over the last decade has attempted to determine whether it is ready to stand on its own by setting up special free-trade zones.

The Designated Information and Communications Industry Promotion Zone, the Special Free Trade Zone and Designated Financial Business Promotion Zone were set up in Okinawa to promote business expansion.

According to the Cabinet Office, the information technology industry in particular took advantage of the zones as 202 companies opened offices in Okinawa and hired 18,000 residents in the process.

Okinawa International University’s Tomikawa said that while some signs of success can be seen, the zones have done little to transform the economy.

“Even with the special economic districts aimed at luring foreign and domestic companies, we have to remember that Okinawa is still a part of Japan where wages are high compared with overseas,” he said.

“It is hard to compete with China and other countries in that aspect,” he said.

In March, Okinawa unveiled its 21st Century Vision, spelling out how the prefecture will take advantage of its geographic location to become a bridge to Asia’s developing economies.

Tomikawa, who helped lay out the program, said that instead of depending on central government largess, for Okinawa’s future, it should seek to be a cultural exchange hub with China and other parts of Asia experiencing strong economic growth.

“Okinawa has continued to be influenced by historic and regional factors,” Tomikawa said, but added that its strategic location should be exploited for future development.

The central government and Okinawa agreed Friday on measures to develop it in the coming years. Key components of the accord include a second runway for Naha airport and a rail network.

The goals are in line with the 21st Century Vision. The government stressed that efforts this time around will help Okinawa grow into an international logistics hub.

Prime Minister Yoshihiko Noda later said that the government “is looking forward to working hand in hand with Okinawa to tap the prefecture’s potential as one of Japan’s frontiers.”

Okinawa Gov. Hirokazu Nakaima also told reporters the plan “will help Okinawa stand on its own feet and make the best of Asia’s dynamism.”

Whether the new projects will truly help Okinawa and its economy remains to be seen. But Fukkiko Kyogikai’s Miyagi said his generation will continue their push to improve the prefecture’s future prospects.

Fukkiko will be holding a symposium in Naha to commemorate the 40th anniversary of the reversion, where topics ranging from Okinawa’s politics to social issues will be discussed openly.

“Some say that 40-year-olds shouldn’t freely speak their minds and instead be more responsible for what they say,” Miyagi said. “But I think it’s the opposite. We must continue expressing our ideas, even when we go beyond 40.”