DAILY SUMMARY OF JAPANESE PRESS 05/10/06

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 05/10/06

INDEX:

(1) Prime minister's statement that it is "not necessary for Mori
faction to support one candidate in LDP presidential candidate"
creating a stir; Pattern of confrontation between Abe and anti-
Koizumi forces becoming clear; Forces outside Mori faction now
finding it easier to express support for Fukuda

(2) 2006 LDP presidential race: Junior members supportive of Abe
for generational change in party are digging in heels against
veteran Fukuda, whose supporters are eager to join party
mainstream

(3) Ozawa ends silence on education, US force realignment

(4) Kakushin (Matter of Heart) column - Positions of LDP, New
Komeito, DPJ about constitutional revision far apart over Article
9

(5) Poll: 42% want Constitution's Article 9-1, 9-2 left intact,
43% want both paragraphs rewritten or amended in part

(6) US consul general: Okinawa's proposed plan for constructing
temporary helipad "is not sufficient"; Urges quick action to
construct V-shaped airstrips

(7) US force realignment settled through defense chiefs' talks;
"Real water" demonstrates transformed Japan-US alliance

(8) Japan to reject China's proposal for joint natural gas
exploration near Senkaku Islands during gas exploration talks to
be resumed next week

(9) Leading Japanese, European manufacturers to develop Indian
market, based in ASEAN, using FTAs and production facilities
there

(10) Income survey; Widening disparity in 30-49 age bracket; Gini
coefficient rose 30% between 1987 and 2002

(Corrected copy) Construction of Futenma alternative facility
will cost over 300 billion yen, 100 billion yen less expensive
than Henoko offshore plan

ARTICLES:

(1) Prime minister's statement that it is "not necessary for Mori
faction to support one candidate in LDP presidential candidate"
creating a stir; Pattern of confrontation between Abe and anti-
Koizumi forces becoming clear; Forces outside Mori faction now
finding it easier to express support for Fukuda

NIHON KEIZAI (Page 2) (Full)
May 1, 2006

Commenting on the Liberal Democratic Party's (LDP) presidential
election in September to choose his successor, Prime Minister
Junichiro Koizumi stated that it would not be necessary for the
Mori faction, to which he had belonged before becoming prime
minister, to support a unified candidate. His statement meant
that faction members Chief Cabinet Secretary Shinzo Abe and
former Chief Cabinet Secretary Yasuo Fukuda could both run in the
race. The blowback from his statement is still being felt. Though

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his remark has paved the way for Abe to run in the election by
checking the move to pick Fukuda as a single candidate, it has
also made it easier for anti-Koizumi and Abe forces outside the
faction to overtly express their support for Fukuda. The skirmish
in the run-up to the LDP presidential election is gradually
heating up.

Silence is expression of displeasure

Although it sounded as if the prime minister had encouraged free
competition in the presidential election, LDP members have
interpreted his remark differently. It is clear that Abe is the
person the prime minister has in mind as his successor. Koizumi
made his statement on the pretext of avoiding a split in the Mori
faction, but by saying so, he seems to have rejected a plan
envisaged by former Prime Minister Yoshiro Mori and others who
are working to have the faction pick Fukuda as its only
candidate. In response to the prime minister's statement backing
him, Abe lined up with him: "Factions no longer have a propensity
to stand together and go forward with everything in perfect
order."

Internal Affairs Minister Heizo Takenaka, who has frequently
worked with Abe over economic policy, echoed his remark; "The
prime minister's pet argument is that neither elections nor
personnel appointments should be handled in terms of factions."
Mori has been silent, which is being taken as an expression of
his displeasure.

Asked about whether he talked with Mori since he made that
statement, the prime minister said the same day, "I have not had
contact with him at all."

The prime minister's "recommendation of abandoning a faction-
based approach" to the upcoming presidential race has also made
it easier for anti-Koizumi and Abe forces other than the Mori
faction to voice their views on the election.

Split of Mori faction possible

Commenting on the possibility of the Mori faction splitting over
which contender to support -- Abe or Fukuda -- former LDP
Secretary General Koichi Kato pointed out during a TBS TV talk

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show, "I think there is such a possibility." As a campaign issue
for the presidential race, he cited Asia diplomacy, including
policy toward China, whose relations with Japan have been
strained over the prime minister's visits to Yasukuni Shrine, and
the social divide, which has widened due to the promotion of
structural reforms.

The New Generation's Forum for Cooperation with Asia, a study
group of first-term Lower House members, including Masaaki Taira,
yesterday held an inaugural meeting, bringing together nine
participants. Rumor has it that the group, which advocates the
rebuilding of an Asia diplomacy, may try to pave the way for
Fukuda, who plays up importance of Asia diplomacy, to run for the
race.

Amid a growing confrontation between Abe and Fukuda, Finance
Minister Sadakazu Tanigaki and Foreign Minister Taro Aso are
increasingly worried that their chances for the prime
ministership might sink into oblivion.


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Commenting on the prime minister's statement, Aso during
yesterday's conference bluntly noted, "The statement is about the
Mori faction. Since it has nothing to do with me, I am not
interested in it." Tanigaki also flatly said, "I have no special
comment to make."

Yosano's name floated

As a result of the Koizumi statement, anti-Koizumi and Abe forces
now find it easier to make their moves, but Fukuda has yet to
decide whether to run for the race or not. He will visit the US
from May 10 through 18. He plans to meet with former US
Ambassador to Japan Baker and other prominent officials to stress
his efforts to deal with Asia diplomacy and Japan-US relations.
However, some take the view that if Abe announces his decision to
run in the race, Fukuda would give up his candidacy.

If the anti-Koizumi and Abe forces find Fukuda has decided not to
run despite their efforts to support him, they may be urged to
fundamentally review their strategy. Some of them have already
begun making statements assuming Fukuda might bow out of the
race. Kato noted, "There is an unexpected cabinet minister who is
eager to run for the race." As a fifth candidate to counter Abe,
the name of State Minister for Financial Affairs Yosano has now
been floated.

(2) 2006 LDP presidential race: Junior members supportive of Abe
for generational change in party are digging in heels against
veteran Fukuda, whose supporters are eager to join party
mainstream

YOMIURI (Page 4) (Abridged)
May 10, 2006

Following Prime Minister Koizumi's indication that the Mori
faction would not have to field a single candidate for the LDP
presidency, opinion is growing in the faction that both Chief
Cabinet Secretary Shinzo Abe, 51, and former Chief Cabinet
Secretary Yasuo Fukuda, 69, should both run in the race. Veteran

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LDP members not belonging to the Mori faction are also eager to
field Fukuda with the aim of joining the mainstream in the party
and avoiding a generational change of leadership in the party.
Junior members, on the other hand, are determined to rally around
Abe.

LDP Upper House Secretary General Toranosuke Katayama expressed
understanding yesterday about Abe and Fukuda running in the race,
telling the press conference, "Factional unity is important to
many members, but it's difficult to force a decision on all
members."

Former Secretary General Koichi Kato also noted on a TBS program
yesterday, "The mentality to produce a single candidate could
eventually destroy the party."

There exist other views in the party.

A senior Tsushima faction member supportive of Fukuda indicated
that Fukuda has a chance to defeat the nationally popular Abe,
noting: "If the Tsushima faction teams up with pro-Fukuda forces
in the Mori faction and the Yamasaki faction, Fukuda can beat
Abe. Every faction has to face the Upper House election next
year, so there is no need to pick someone who will only become a

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'poster boy' for that poll."

The Niwa, Koga, Ibuki, and other factions tilted toward Fukuda
are planning to join the mainstream by joining forces in the name
of rebuilding Asia policy. But some members still think that
Fukuda may not seek the presidency even if former Prime Minister
Mori gave up the idea of fielding a single candidate, because he
is not the type of person who comes forward voluntarily.

Meanwhile, a junior Abe supporter predicted: "Mr. Abe will run in
the race no matter what, setting off a struggle between veteran
and junior members rather than a fight among factions."

A battle between Abe and Fukuda could split not only the Mori
faction but also other factions. Executive members of the Ibuki
and the Niwa-Koga factions are planning to hold a meeting shortly
to exchange views.

(3) Ozawa ends silence on education, US force realignment

ASAHI (Page 4) (Full)
May 10, 2006

Since assuming his present post, Minshuto (Democratic Party of
Japan) President Ichiro Ozawa had not spoken on key policies
while giving priority to unifying views in his party. But he
opened up in a press conference yesterday. He stressed the need
to reflect local identity in education and also criticized the
government's lack of explanation regarding role-sharing between
Japan and the US in realigning US forces in Japan. By
underscoring points of contention, he indicated his determination
to thoroughly fight the ruling camp in the final stage of the
current Diet session.

In the remaining Diet session, the focus of discussions will be
on a bill amending the Fundamental Law of Education. Ozawa had
refrained from commenting on the bill, only saying: "Unifying
views in the party is my top priority." In the press conference,
however, Ozawa lashed out at the government's draft bill that
included the expression "an attitude that respects our nation and
homeland," saying:

"Just because such words as 'patriotism' and 'love' are
mentioned, people do not love the nation in a real sense. It is
more important to consider how to build a society that can foster
independent individuals, as well as love for their nation and
homeland."

Ozawa also touched on education and called for a review of the
education board system. He said: "It does not stand to reason
that neither the central government nor local governments take
responsibility for compulsory education." He added: "The
government should allow local governments to assert their
identity and independence more in the contents of education." He
thus stressed that the focus in educational reform should be on
reviewing the current centralized system.

The largest opposition party has decided to finalize its own
proposals to counter the government's draft bill amending the
Fundamental Law of Education this week. Ozawa's remarks will
contribute to setting the direction of the party.

Ozawa voluntarily took up the issue of US force realignment at

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the outset of the press conference and said:

"Japan's share is not the problem. The serious problem is that
the government, while being unable to explain to the people
Japan's role in national security and future options for role-
sharing between Japan and the US, is being asked to use taxpayer
money to pay a share of the realignment cost. I am poised to
grill the Koizumi government for its stance and conduct a heated
debate in the final stage of the session."

(4) Kakushin (Matter of Heart) column - Positions of LDP, New
Komeito, DPJ about constitutional revision far apart over Article
9

TOKYO SHIMBUN (Page 3) (Almost full)
May 3, 2006

Hidehiro Honda

The Constitution of Japan will today mark its 59th anniversary.
The ruling Liberal Democratic Party (LDP) and the opposition
Democratic Party of Japan (Minshuto or DPJ) put their thoughts
into shape as "a draft of a new constitution" and "a set of
proposed amendments to the Constitution" respectively. The New
Komeito plans to unveil possibly in October its constitutional
proposals to beef up the current Constitution. Debates on
constitutional revisions are reaching a turning point. We examine
the positions of these three parties about constitutional
revisions.

Basic policy

The LDP is an advocate for rewriting the Constitution. Last
October, it drafted a new constitution by adding drastic
revisions to the current Constitution.

Keeping in mind the criticism that the current Constitution was
imposed by the United States on Japan, the LDP stated in the
preamble of its draft, "We, the Japanese people, as sovereign and
based on our will and determination, will establish this
constitution as a self-imposed one with these words, `We, the
Japanese people, based on our will and determination, and as
sovereign, do establish this constitution.'"

The LDP's draft retains the Emperor as the symbol of the state
and respects the so-called three principles: sovereign power that
resides with the people, pacifism, and basic human rights.
Characteristic of the draft is that the prime minister's
authorities are enhanced in this way: "The prime minister directs
and supervises all administrative offices and serves as a
comprehensive coordinator." The draft also eases the requirement
for constitutional revision from "two-thirds or more" of all the
members of each house of the Diet to "a majority."

Minshuto, based on its set of proposed amendments to the
Constitution already released, intends to draft a new
constitution by the end of next year. In its constitutional
revisions, it says, "We will boldly establish a future-oriented
conception of the constitution."

As the basic goals of the new constitution, Minshuto cites
building a new society in which sovereignty rests with the people
and remaking Japan into a state conscious of environmental

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conservation and peace-making.

The New Komeito insists that in order to meet the changing times,
the current Constitution needs to be modified with the addition
of new provisions. The party plans to unveil a set of new
proposals in October. According to them, the party will retain
the current Constitution almost as is but will add new ideas like
human security, which is meant to protect human life, livelihood,
and dignity.

Right to self-defense

The three parties' positions are far apart over how to treat
Article 9, as everyone has expected.

The LDP in its draft keeps the first paragraph of Article 9 as
is, but it rewrites the second paragraph to stipulate that Japan
will possess a Self-Defense Military to "ensure the peace and
independence of the country, as well as the safety of the country
and its people." The draft does not mention the right to
collective defense, but the party says Japan can exercise it. It
also states that Japan should make international contributions to
secure world peace and safety.

The LDP's draft allows Japan to use armed force abroad but shies
away from mentioning specifics, noting that the criteria for the
use of armed force and the sphere of activities using armed force
will be determined by a Basic Law on Security Affairs and other
legislation.

Minshuto makes clear Japan's possession of the right to self-
defense by pointing out the need to review Article 9. It allows
Japan to take part in UN-led multilateral forces and UN
peacekeeping operations, but it has yet to draw a conclusion
about whether to allow Japan to use armed force abroad.

Party President Ichiro Ozawa has indicated that under the current
Constitution, Japan is allowed to use armed force abroad if Japan
takes part in activities led by a multinational force organized
under a UN resolution.

In the recent party presidential race, Ozawa, giving
consideration to some party members cautious about using armed
force abroad, adopted softer language, saying, "There is a need
to establish UN-centered security principles." How the party will
form a unified view about this matter in the future remains to be
seen.

The New Komeito states that both paragraphs of Article 9 should
be kept as is, and it is continuing discussion on whether to
create a third paragraph to stipulate the existence of the Self-
Defense Forces (SDF) and international contributions. The party's
position about the right to collective defense is "not to allow
Japan to exercise it," according to Akihiro Ota, chair of the
party's Research Council on the Constitution.

Provisions on duties and obligations

The LDP and Minshuto both add environmental rights, the right to
privacy, and the rights of crime victims to the current
Constitution. The New Komeito, as well, will release its
constitutional proposal dealing with similar rights.


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The LDP's draft stipulates "people's responsibilities" thusly:
"Responsibilities and duties follow freedom and rights."
Minshuto, emphasizing respect for the dignity of human beings as
the basis of its policy, stipulates common responsibilities to
deal with common tasks facing society, such as environmental
conservation.

The Japanese Communist Party and the Social Democratic Party are
opposed to constitutional revisions, arguing that it is possible
to deal with things under the current Constitution without adding
new rights to it.

(5) Poll: 42% want Constitution's Article 9-1, 9-2 left intact,
43% want both paragraphs rewritten or amended in part

ASAHI (Page 1) (Abridged)
May 9, 2006

Prior to May 3 Constitution Day, the Asahi Shimbun conducted a
nationwide public opinion survey on the Constitution of Japan. In
the survey, respondents were asked if they thought the nation's
postwar constitution should be amended on the whole. In response
to this question, "yes" totaled 55%, leveling off from 56% in
last year's survey. In the meantime, "no" totaled 32%, likewise
flat from 33% in the last survey. Respondents were also asked if
they thought Article 9-1, which renounces war, and Article 9-2,
which stipulates Japan's maintenance of no war potential, should
be amended. In response, "no" totaled 42%, with "yes" at 43%. In
the breakdown of "yes" answers, 18% wanted both paragraphs to be
amended, with 9% wanting only Article 9-1 to be amended and 16%
wanting only Article 9-2 to be amended.

The survey was conducted April 15-16 on a face-to-face basis,
with a total of 3,000 persons sampled out of the nation's voting
population.

The Diet, in its current session, focuses on a national
referendum bill to stipulate procedures for amendments to the
Constitution. In the survey, 53%, or a majority of the nation,
said there is no need to do so before constitutional revision is
debated to the full. As seen from the figure, the greater part of
those polled remained cautious about revising the Constitution.
In the meantime, the proportion of those thinking it better to do
so was no more than 32%.

The same question has been asked in the previous surveys since
1997 about the advisability of constitutional revision. "Yes"
accounted for 46% in 1997, 47% in 2001, 53% in 2004, 56% in 2005,
and 55% in the latest one, while "no" respectively accounted for
39%, 36%, 35%, 33%, and 32%. "Yes" topped 50% in the past three
surveys. In the latest survey, however, it stopped increasing.
Those who answered "yes" were further asked if that was because
they wanted to change Japanese society substantially. In response
to this question, 38% answered "yes," with 57% saying "no." This
shows that those in favor of constitutional reform would like to
have the Constitution meet the present state of Japan, instead of
hoping to change Japan with constitutional reform.

(6) US consul general: Okinawa's proposed plan for constructing
temporary helipad "is not sufficient"; Urges quick action to
construct V-shaped airstrips

YOMIURI (Western Japan version; inside page) (Full)

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May 10, 2006

US Consul General Thomas Reich in Okinawa Prefecture, yesterday
responded to an exclusive interview with the Yomiuri Shimbun at
the US Consulate General in the Urasoe City, Okinawa. In the
interview, when asked about Okinawa Prefecture's recently
proposed plan to construct a temporary helipad in connection with
the relocation of the US Marine Corps Futenma Air Station in
Ginowan City, Reich stated: "That plan differs from what Japan
and the United States have agreed on. I don't think the two
governments will modify what they have agreed upon." He was the
first US government official to express a view about the Okinawa
prefectural government's proposed plan to construct a temporary
helipad at a coastal area of Camp Schwab in Nago City.

Reich stated: "The four heads of neighboring municipalities,
including the mayor of Nago City, have given their approval to
the relocation of the Futenma airfield to Camp Schwab. The
Okinawa prefectural government's plan lacks a runway (necessary
for training),and it does not appear to be a good proposal in
the eyes of the US government." From the standpoint of
maintaining deterrence and removing the hazardous nature of the
Futenma airfield from its neighborhood, he indicated the need to
quickly construct two V-shaped airstrips on a coastal area of
Camp Schwab as agreed on between Tokyo and Nago City.

The consul general described the final report on the realignment
of US forces in Japan the Japanese and US governments had
recently agreed on as being significant, and underscored: "It
came out in good shape in terms of strengthening the Japan-US
alliance and in view of the global situation." Reich himself had
interviewed heads of municipalities and experts in the prefecture
over the past two years and found that they have been strongly
interested in: 1) troop reduction, and 2) an early return of the
Futenma airfield to Okinawa. Citing these two desires, Reich
said, "These two things desired by most people will shortly come
true, so I believe we can obtain understanding from the people of
Okinawa."

Reich also referred to other relocation plans, for instance, the
planned transfer of jet fighter training now carried out at
Kadena Air Base in Kadena Town to somewhere in the Japanese
mainland and stated: "The transfer plan will bring troops to
locations where they have never stayed. I hope people in those
areas will open themselves to US troops and welcome them."

(7) US force realignment settled through defense chiefs' talks;
"Real water" demonstrates transformed Japan-US alliance

NIHON KEIZAI (Page 2) (Full)
Evening, May 9, 2006

By Hiroshi Maruya, Washington

A somewhat nostalgic expression cropped up in Japan-US talks on
US force realignment, which was settled recently. US President
Ronald Reagan had called it "real money." In his talks with
Defense Agency Directory General Fukushiro Nukaga, US Defense
Secretary Donald Rumsfeld referred to it as "pure money." He was

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talking about "real water," or direct fiscal outlays. The
emergence of such an expression demonstrated the transformation
of the Japan-US alliance.


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The United States frequently used the expression "real water" in
seeking greater Japanese demand during the 1980s. Japan also
often used it in explaining the scale of its economic measures in
the late 1990s.

During the Gulf War in 1991, Japan decided to extend an
additional 9 billion dollars to the US-led multinational force
through talks between Finance Minister Ryutaro Hashimoto and US
Treasury Secretary Nicholas Brady. In those days, the result-
oriented America's basic perception was that it had to deal with
the Finance Ministry and the largest faction in the Liberal
Democratic Party (which happened to be the Takeshita faction at
the time) in talks with Japan on any subject involving "money."

Those days are over. Prime Minister Junichiro Koizumi left
negotiations with Washington on US force realignment, including
the cost of relocating Okinawa-based Marines to Guam, entirely to
Nukaga, leaving Washington somewhat apprehensive. But
Washington's skepticism vanished the moment the Defense Agency
struck a deal with Nago to construct two runways in a V shape to
replace Futenma Air Station.

"Nukaga-san, do you have more magic?"

"I will do it."

The conversation took place between US Ambassador to Japan Thomas
Schieffer, who served as a bridge between Tokyo and the Bush
administration, and Nukaga at the ambassador's residence in
Tokyo. Giving a positive assessment of Nukaga's leadership that
produced results on the deadlocked Futenma relocation issue, the
US opted to deal with Japan's defense chief, who was not a member
of the Mori faction, the largest in the LDP.

Rumsfeld, a former CEO of a leading US firm, is severe when it
comes to figures. Rumsfeld held talks with Nukaga on April 23 in
which he insisted for the first three hours that Japan bear 75%
of the cost. Nukaga refused to give in.

After three breaks, Rumsfeld finally said: "It's pointless to
continue our talks today. I'm willing to go to Tokyo to pick up
where we left off today." This prompted Nukaga to present a
compromise plan. They reached an agreement only half an hour
later.

The political settlement by the two defense chiefs carries
significance transcending the fiscal realm.

The Foreign Ministry played a central role in reviewing the Japan-
US security setup in the late 1990s. But the ministry's
involvement in the force realignment negotiations was minimal, as
talks centered on technical matters, beginning with military
operations.

The Japan-US Security Consultative Committee meeting (two-plus-
two) held on May 1 served as a venue to confirm the agreement
reached between Nukaga and Rumsfeld. Gone are the days when the
Self-Defense Forces' "shopping plans" and the interpretation of
the US-Japan Security Treaty were synonymous with security
debates. Policy, military operations, and fiscal disbursement are
becoming a single matter.

The presence of the LDP, the Foreign Ministry, and the Finance

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Ministry playing minor roles in the negotiation process tells
that the Japan-US alliance has entered the third phase following
the Cold War and the post-Cold War era.

(8) Japan to reject China's proposal for joint natural gas
exploration near Senkaku Islands during gas exploration talks to
be resumed next week

SANKEI (Page 3) (Full)
May 10, 2006

The government yesterday decided to formally refuse China's
proposal made during the senior level talks of Japanese and
Chinese officials for joint gas exploration in waters around the
Senkaku Islands, which are Japan's territory. Japan will announce
this decision to China during senior level talks of the two
countries to be resumed in Tokyo next week. In the talks, Japan
will again urge China to accept Japan's joint natural resource
development proposal covering four oil and gas fields around the
median line, which has already been presented to China.
Negotiations, however, are certain to take much time to be
finalized.

In the last senior level talks of Japanese and Chinese officials
held in Beijing March 6-7, China proposed a joint development in
two water areas: one that is on the northern side of the Senkaku
Islands and is close to Japan's territory and within its
exclusive economic zone (EEZ),and the other that is on the
northern side of the Asunaro (Longjing in Chinese) oil and gas
field adjacent to the Japan-South Korea joint continental shelf
development zone and is within Japan's waters from the median
line.

According to a senior Foreign Ministry official, there is the
concern in the government that "China, which claims the Senkaku
Islands, is apparently using a gas and oil joint development
proposal to shift attention away from the territory issue." There
was also an objection in Japan to China's proposal for joint
development on the Japan-South Korea joint continental shelf
development zone, with a Foreign Ministry official arguing: "The
proposal includes only the sea area on the Japanese side from the
median line."

In the talks of senior officials from Japan and China held in
Tokyo last fall, the government proposed jointly developing four
gas and oil fields - Shirakaba (or Chunxiao in Chinese),Kashi
(or Tianwaitian),Kusunoki (or Duanqiao),and Asunaro (or
Longjiang) - and presented a joint development project aimed at
investing in, for instance, mining facilities already constructed
by China and urged China to stop its oil and gas exploration now
being carried out in waters around the median line, but China
rejected Japan's proposal.

China has already set in motion production in Kashi and has
Shirakaba ready to begin production. Its Pinghu oil and gas
field, about 70 kilometers away from the Japan-China median line
and within China's waters, provides oil and natural gas to such
areas as Shanghai via undersea pipelines. In preparation for
increasing demands, China is expanding this oil and gas field and
installed a new mining facility in it in mid-March. There is even
an observation that China will soon start mining works in the
Shaoxing oil and gas field located in the water area dozens
kilometers north from that field.

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In Japan, the government has granted the gas exploration rights
to Teikoku Oil Co., Ltd., but the firm has yet to decide to
launch gas exploration and it instead intends to continue
negotiations with China. As it stands, the fear now emerging in
Japan is that the East China Sea will literally become the sea of
China, given that a number of Chinese mining facilities will be
built there and thereby apparently allowing China to determine
the fate of Japan's lifeline sea lanes.

(9) Leading Japanese, European manufacturers to develop Indian
market, based in ASEAN, using FTAs and production facilities
there

NIHON KEIZAI (Top Play) (Excerpts)
Evening, May 10, 2006

(Singapore, Reporter Kiyoshi Noma: Bangkok, Reporter Hisatsugu
Nagao)

Leading manufacturers of Japan, South Korea and Europe have begun
using member nations of the Association of Southeast Asian
Nations (ASEAN) as bases for exports to India. This is because
ASEAN member nations can now exports goods to India at low tariff
rates because of a free trade agreement (FTA) they have signed
with that nation. Some companies have started expanding their
export bases in Singapore. Southeast Asia has originally strong
ties with Japan, the US and China, but now it will likely speed
up efforts to construct export bases with an eye on the Indian
market.

Toshiba began exporting refrigerators and washing machines
manufactured at its plant in Thailand to India. It is now looking
into the possibility of exporting electric rice cookers to that
nation. Matsushita Electric Industrial Co. is exporting Braun
tubes to India from Thailand. NEC began full-scale exports of
semi-conductors manufactured in Singapore from 2005.

South Korea's Samsung Electronics is supplying microwave ovens
made in Thailand to the Indian market. The TCL Group, China's
leading electric appliance manufacturer, has characterized
exports of CRT-based televisions to India as a key agenda item,
as President Ceng Chun-xin of its Thailand-based affiliate put
it.

Novartis, a prominent Swiss pharmaceutical company, plans to
export pharmaceutical products produced in Singapore to the
Indian market as early as 2008. It is now constructing a plant in
Singapore to manufacture medicines for high blood pressure and
cardiac diseases, by investing approximately 180 billion dollars.

One reason for those companies have chosen Southeast Asia as
their bases for exports to the Indian market is that they have
multilevel production facilities starting from the manufacturing
of parts to assembly due to investments made by Japanese,
European and US companies over the past two decades. Since China
is now beginning to serve as a plant for the world, many
companies in Southeast Asia have spare productive capacity. These
plants aim to raise their operation rates.

FTAs are also a major factor for those company having chosen
ASEAN. Thailand and India scrapped tariffs on 82 items as an
early implementation measure in September 2004. Singapore and

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India had an economic partnership agreements (EPA) put into
effect in August 2005. Tariffs on refrigerators and Braun tubes
will be scrapped over four years, starting with a 10% cut.

The moves are beginning to produce results. Since last October
Sony has exported CRT-based televisions that lay emphasis on low
pitch sound to India. It has sold more than 40,000 sets over six
months. It produces Braun tubes in Singapore and assembles them
into finished products for exports to India at its Thai plants.
The destination of approximately 60% of Sony's CRT-based
televisions is India.

(10) Income survey; Widening disparity in 30-49 age bracket; Gini
coefficient rose 30% between 1987 and 2002

TOKYO SHIMBUN (Page 1) (Slightly abridged)
May 9, 2006

Research conducted at the National Social Security and Population
Issue Research Center, whose director is Yoshihiro Kaneko,
discovered on May 7 that the Gini coefficient ASTERISK for men
and women in the 30-49 age bracket has risen about 30% over a 15-
year period ending in 2002. The research re-calculated data
collected in income distribution surveys by the Ministry of
Health, Labor and Welfare (MHLW).

Income disparity widened among elderly people aged over 60.
Though the disparity in this age bracket was substantially
narrowed in terms of redistributed income added with pensions, no
such improvement was seen among those in the 30-49 age brackets
even after tax cuts and social security benefits are taken into
account. It has been pointed out that disparity among working
generations could further widen in the future. How to deal with
the widening income disparity will likely become a domestic
issue.

Concerning income disparity, the Cabinet Office released this
view in January: "Income disparity has seemingly widened due to
an increase in elderly households. It is not possible to
determine the actual widening of disparity from statistics." The
MHLW has pointed out the widening wage disparity in the outline
of the 2006 Labor and Economy White Paper, showing differences in
the perception of the present state among government officials.

The center re-calculated data obtained through income
redistribution surveys carried out in 1987, 1993 and 2002 and
compared the statistics by gender, age, using5-year increments,
and income brackets. The MHLW carries out such a survey every
three years and release the results, after tallying data by
household.

The comparison found that in terms of before tax income that does
not include social security benefits, the Gini coefficient for
men aged between 30 and 49 rose 10.2-29.6% and that for women
aged between 30 and 44 rose 9.8-23.3%. The Gini coefficient for
men aged between 35 and 39 jumped 29.6%. The disparity markedly
widened among both men and women since 1993, the year when the
bubble economy burst.

Those of men aged over 65 and women aged over 60 also increased,
but pension benefits improved their income disparity.

ASTERISK (TN: for a definition, see:

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http://en.wikipedia.org/wiki/Gini coefficient)

(Corrected copy) Construction of Futenma alternative facility
will cost over 300 billion yen, 100 billion yen less expensive
than Henoko offshore plan

YOMIURI (Page 1) (Excerpts)
May 10, 2006

An outline of the plan to build an alternative facility for the
US Marine Corps' Futenma Air Station at the coastline of Camp
Schwab in Nago, Okinawa Prefecture, became clear yesterday. The
facility will occupy a total space of 180 hectares. Of it, about
20% will be built on the land portion of the base with the
remaining 80% on reclaimed land. The alternative facility is
expected to be completed by 2014 at a cost of 300 to 350 billion
yen -- l00 billion yen less than the previous Henoko offshore
plan. The government plans to determine the plan in detail by the
summer based on talks with the Okinawa and Nago municipal
governments to begin environment assessment procedures in the
fall.

The US force realignment final report, released on May 1,
specified the construction of two runways in a V shape measuring
1,600 meters each and 1,800 meters in total including the
overruns.

It also became clear that reclamation would cost 200 billion yen
and that the construction of such facilities as the runways,
apron, aircraft hanger, and the relocation of existing facilities
from Camp Schwab to the training range would come to over 200
billion yen.

SCHIEFFER