Q&A-Japan Inc's relationship with opposition Democrats

Sun Aug 30, 2009 6:46pm EDT

By Yoko Nishikawa

Aug 31 (Reuters) - Japanese voters handed the opposition Democratic Party of Japan (DPJ) a crushing victory over the Liberal Democratic Party (LDP) in an election on Sunday, ending an almost unbroken LDP reign of more than 50 years.

Below are some questions and answers about the Democrats' relationship with big business.

HOW DO THE DEMOCRATS GET ON WITH KEY BUSINESS GROUPS?

Its policies are friendlier to consumers and labour unions than to the big firms that have long been the engine of growth.

The biggest business lobby, Nippon Keidanren, has worked closely with successive LDP governments and kept its distance from the Democrats. It contributed nearly 3 billion yen ($32 million) to the LDP in 2007. The Democrats received just 83 million yen.

As the likelihood of an opposition victory grew, the group cautiously reached out to the opposition. [ID:nT213008] The head of the group expressed support for the LDP in January but kept mum about his preferred party as the election approached.

Anther business lobby, Keizai Doyukai, whose members join as individuals rather than company representatives, gave the LDP and the Democrats the same score, 45 out of 100, on their campaign platforms.

WHAT DON'T BUSINESSES LIKE ABOUT THE DEMOCRATS?

The Democrats want to put money directly in the hands of consumers by providing child allowances, eliminating highway tolls and making fuel cheaper. That contrasts with the LDP's traditional approach of trying to revitalise corporate activity and boost wages as a result.

Business leaders are upset with the Democrats' pledge to cut greenhouse gas emissions by 25 percent from 1990 levels by 2020, a much more ambitious target that set by the government. [ID:nT250210]

Many companies are unhappy with the Democrats' vow to keep the corporate tax rate at around 40 percent, one of the highest among major economies. But the Democrats have promised to lower the corporate tax rate for smaller firms to 11 percent from 18 percent. [ID:nT361237]

Business leaders fear a proposed ban on temporary workers at manufacturers could force firms to shift production overseas and make it harder for companies to hire employees once the economy recovers. They also oppose the Democrats' plan to establish a nationwide minimum wage of 800 yen per hour, eventually raising it to 1,000 yen.

WHO WOULD BE THE WINNERS AFTER THE DPJ VICTORY?

Most corporations have refrained from taking sides in public, but some industries have come out against the Democrats' emission cuts target.

Healthcare, trucking and shipping firms will probably benefit from a Democrats' win because of the plan for a stronger social safety net and eliminating tolls on Japanese highways. [ID:nT205281]

Their pledge to promote clean energy and reduce greenhouse gases could also help makers of hybrid cars, such as Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz) and Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz), although they are key members of Nippon Keidanren.

Construction firms and general contractors could lose out if the Democrats cut public works projects as expected.

Business groups will probably find ways to deepen dialogue with the Democrats but party Secretary-General Katsuya Okada has said it would not beg at Japan Inc's door. "We do not particularly want Keidanren to support us," he said. "We will firmly stress our policies to the voters." [ID:nT241454] (Editing by Edwina Gibbs)

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