Although Economic and Fiscal Policy Minister Heizo Takenaka garnered the most proportional representation votes on his party’s ticket in Sunday’s Upper House election, analysts on Monday called his performance modest and said it might cloud the outlook for Prime Minister Junichiro Koizumi’s economic reforms.
Takenaka, 53, a scholar-turned Cabinet minister and an architect of Koizumi’s economic reforms, won a proportional representation seat on the Liberal Democratic Party ticket by drawing 722,000 votes, a figure short of the party’s expectations, the analysts said.
Some LDP lawmakers had hoped Takenaka would follow the example of Yoichi Masuzoe, a popular TV critic who captured 1.59 million votes in the 2001 Upper House election — the largest number won by a single candidate in that poll.
“Takenaka said he wants to gear up for reforms, but he has lost the momentum enabling him to do so,” said Shigenori Okazaki, political analyst at UBS Securities Japan Ltd.
Takenaka was initially expected to capture up to 1 million votes, Okazaki said.
Takenaka — who doubles as economic and fiscal policy minister and financial services minister — has based his political footing on the reform initiatives of Koizumi, who was backed by high approval ratings.
The LDP had sought to emerge from Sunday’s election with 51 seats, but only managed to get 49. This situation may hamper any drastic reforms, Okazaki reckoned.
He said the outcome might cool speculation that Takenaka might be appointed to one more ministerial post — a new position reportedly planned by Koizumi to spearhead the country’s postal reforms.
Takenaka sounded optimistic as he declared victory Sunday night, saying: “I appreciate that people have put their confidence in me. This means Koizumi’s reforms have been highly praised.
“Now that I have more serious responsibilities as a Diet member, I would like to drive not only financial and fiscal reforms but also a wider range of reforms, such as social security, education and employment.”
Some economists are not as optimistic.
Kenji Yumoto, chief senior economist at Japan Research Institute Ltd, said Takenaka’s reform drive could be limited, even if he is appointed to the planned new post.
“Now that Takenaka has become a LDP member, it will be hard for him to go forward with drastic reforms that are opposed by other party members,” Yumoto said.
A source of fresh concern has already emerged over the prospect of postal reforms. In Sunday’s election, Kensei Hasegawa, an ex-postal agency bureaucrat and an opponent of the privatization of postal services, won a proportional representation seat on the LDP ticket, gaining the third-largest number of votes.
For the finance industry, Takenaka’s role as a lawmaker will have limited impact, with a new rule already enacted to accelerate the realignment of regional banks and an unlimited state guarantee for bank deposits set to end next year, said Hideo Kumano, senior economist at Dai-Ichi Life Research Institute Inc.
Financial markets regained ground Monday, as overseas investors viewed Sunday’s election result as better than expected.
The benchmark Nikkei 225 average rallied above 11,500 points and the yen gained against the dollar.
The fate of Takenaka, a former Keio University professor, had gained much attention because it is rare for the prime minister to appoint an academic to two ministerial positions and allow him to exercise a large influence over the economy.
Because of this, Koizumi has met harsh criticism from many LDP members, particularly with the economy continuing its deflationary trend.
With the economy braced for a long-awaited recovery, however, the LDP’s old guard urged Takenaka to run for the Upper House and attract a great number of votes for the party.
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