Japan Inc. Wants Abe To Focus On Economy, Not Military Bills: Reuters Poll

Most Japanese firms oppose Prime Minister Shinzo Abe's efforts to push through legislation next month that will expand the country's military reach, saying the campaign does not have the support of the people and the economy should take priority, a Reuters survey shows.

Abe has said he is determined the bills, which would end a ban on fighting to defend a friendly country under attack, be enacted in the current session of parliament which ends Sept. 27. But his signature defense legislation has been unpopular, sparking protest rallies and dragging down his approval ratings.

The monthly Reuters Corporate Survey showed 62 percent of companies oppose enacting the bills this session, with many respondents writing there had not been enough debate to gain the understanding of the people. Some also said it would be a violation of Japan's pacifist constitution.

Asked what should be the government's biggest priority, only 2 percent of companies said security and diplomacy. Sixty-three percent said ending deflation and promoting economic growth while a third chose curbing the country's runaway debt.

"Forcing the bills through the current parliamentary session could sow the seeds of trouble for the future, impeding the smooth enactment of economic measures, which are expected to come later," a manager at an electronics firm wrote.

The survey of 516 big and medium-sized firms was conducted Aug. 3-17 for Reuters byNikkei Research, with 241 answering the question about the military bills. Companies respond on condition of anonymity.

Abe last month pushed the bills through the lower house, where his ruling coalition has a two-thirds majority, despite vociferous protests from opposition parties. Even if the opposition delays a vote in the upper house, it can be passed into law with a second vote in the lower house provided it garners a two-thirds majority.

Corporate opposition to a swift enactment echoes public opinion, with a poll by Kyodo news agency showing 62.4 percent of Japanese did not support the bills' passage in the current session of parliament.

LOSING POLITICAL CAPITAL

Pushing through his national-security agenda could deplete the political capital Abe needs to press on with "Abenomics" just as the world's third-biggest economy sputters.

His support rate slid last month after his ruling bloc pushed forward with the legislation. It regained a bit of ground last week, back above 40 percent after he made remarks to commemorate the 70th anniversary of the end of World War Two, saying he upheld previous apologies for Japan's part in the war although he did not offer a new apology.

But if uptick proves temporary, the risk of the economy suffering grows.

"If Abe's support rate slips further, that would make it harder for him to push through painful but necessary structural reform," said Hidenobu Tokuda, senior economist at Mizuho Research Institute, who reviewed the survey results.

The day the survey closed, government data showed the economy shrank in the second quarter, its first contraction in three quarters.

Seventy-four percent of firms in the survey said the economy was now expanding. But just over 80 percent said it was not well placed to withstand a new sales tax hike to 10 percent from 8 percent that is scheduled for April 2017 and believed new economic measures were needed.

Sales tax hikes are aimed at cutting back the country's huge government debt levels but an increase to 8 percent from 5 percent in April last year tipped the economy into recession for two straight quarters. Delaying the new hike, however, would require rewriting laws.