Japan Inc wants Abe election win, but smaller majority

Japan's PM and ruling Liberal Democratic Party (LDP) president Shinzo Abe delivers his speech during an election campaign in Yaizu, Shizuoka prefecture, on Oct 11, 2017. PHOTO: AFP

TOKYO (REUTERS) - Japanese companies overwhelmingly want Prime Minister Shinzo Abe's ruling coalition to stay in power in this Sunday's national election but about two-thirds want it to lose seats, a Reuters poll found.

The survey suggests corporations want political stability but don't want to hand Abe a landslide victory for fear he might become complacent about reviving the economy.

Many companies in the survey expressed concern that a big election win would encourage Abe to invest his energy in a long-held ambition to revise Japan's pacifist constitution, at the expense of economic policy.

"We need political stability. But the top priority should be economic steps, not revising the constitution," wrote a manager of a construction company, who preferred an outcome in which the ruling bloc of Abe's Liberal Democratic Party and partner Komeito may lose seats, but keep a simple majority.

Japanese go to the polls on Sunday to elect representatives for the country's 465-member lower house, the more powerful of Japan's two-chamber national diet, or parliament.

Forecasts published last week predicted Abe's coalition would win around 300 seats, close to the two-thirds super-majority it held before he called the election. Along with like-minded parties, the LDP bloc also has a majority in the upper house, which would be needed to revise the constitution.

The corporate survey was conducted Sept 28 to Oct 12 and found that 94 per cent of companies hoped Abe's coalition would win the election.

However, some 48 per cent wanted his bloc to obtain a smaller majority, while 20 per cent hoped the ruling camp would retain the 323 seats it held before the lower house was dissolved last month. Seven per cent wanted the ruling bloc to win more seats.

"Those who expect the unexpected like Brexit and (Donald) Trump's presidency are doomed to disappointment. This election has no single, overriding issue," said Masaki Kuwahara, senior economist at Nomura Securities, who reviewed the survey results. "Split votes among opposition parties should help Abe's coalition." The campaign has seen the emergence of Tokyo Governor Yuriko Koike's new Party of Hope, which advocates a freeze on a planned sales tax hike in 2019.

The Reuters survey showed a slim majority wanted Abe to stick to a budget-balancing goal, while opposing his plan to divert revenue from a planned hike in the national sales tax towards education and child-care, rather than towards debt repayment.

"Abe must be playing to the gallery by promising such a plan that may attract voters in the election. How on earth will Japan be able to finance the cost of social security services?" a manager of a metal products machinery maker wrote in the survey.

Asked what policies should be tackled after the election, fiscal consolidation - or efforts to curb the industrial world's heaviest public-debt burden - was the top choice, picked by 35 per cent, followed by additional fiscal stimulus, chosen by 14 per cent.

Just 5 per cent wanted further monetary stimulus, underscoring the dominant market view that easy-money policy has its limits. Only 3 per cent said revising the constitution should be a top priority.

"Many companies are wary of a potential collapse of public finances, which would destabilise the financial system and broader economy," Kuwahara said. "They also fear that revising the pacifist constitution will send a wrong signal to Asian neighbours" who suffered from Japan's wartime aggression.

The survey, conducted for Reuters by Nikkei Research, polled 548 big and mid-sized firms that reply on condition of anonymity. Around 230 companies answered the questions on the outlook for the election and policies.

Join ST's Telegram channel and get the latest breaking news delivered to you.