PM FUKUDA STOPS MOVE TO LIMIT FDI FOR AIRPORTS

C O N F I D E N T I A L TOKYO 000572 SIPDIS SIPDIS STATE FOR EAP/J, EEB/TRA FOR BYERLY PASS TO USTR FOR BEEMAN PASS TO DOT FOR GRETCH E.O. 12958: DECL: 03/01/2018 TAGS: EAIR PGOV EINV PREL JA SUBJECT: PM FUKUDA STOPS MOVE TO LIMIT FDI FOR AIRPORTS REF: A. TOKYO 00467 ¶B. TOKYO 0408 Classified By: Ambassador J. Thomas Schieffer. Reason 1.4 (b)(d) ¶1. (C) Prime Minister Fukuda has decided to strip out the proposed restrictions on foreign investment from the Transportation Ministry's (MLIT) draft Airport Development Bill, MOFA Economic Affairs Bureau DG Yoichi Otabe told EMIN February 28. Otabe took credit for bringing USG concern about the matter to Chief Cabinet Secretary Machimura,s attention and said Machimura, along with Foreign Minister Koumura, Finance Minister Nukaga, and a number of senior LDP politicians had all taken strong positions against the law, isolating MLITT Minister Fuyushiba in the Cabinet. Rumors to this effect circulated in the press beginning February 27, and Minister Fuyushiba confirmed the decision at a February 29 news conference. Even more surprising, he told reporters, "Acceptance of foreign investment is a dominant trend for Japan as a country open to the world," according to a Kyodo press report. Otabe also confirmed what we had heard from others, that the Prime Minister himself made the final decision. ¶2. (C) In related news, Diet Member Hiroshige Seko (LDP, Upper House, Wakayama) bragged on his website blog that he had been instrumental in encouraging Deputy Chief Cabinet Secretary Mitsuhide Iwaki to correct MLITT's Civil Aviation SIPDIS DG Hisayasu Suzuki inappropriate lobbying conduct. Meanwhile, METI Americas division officials expressed guarded relief to Econoff February 28 that the airport bill would no longer be on the agenda of the upcoming Investment Working Group session. ¶3. (U) The Airports Development Bill originally included the following main points: airports will have a cap on landing fees and other service fees such as passenger service facility costs; a written long-term business plan would have to be coordinated with the government; and changes to airport development and maintenance must be written into a comprehensive plan, presumably for government, i.e., MLIT approval. Comment -------------- ¶4. (C) MLIT seems to have lost this round and is currently being highlighted in the press for shockingly high numbers of "amakudari" positions in construction firms, the Japanese practice of moving retired senior officials into private sector jobs in industries they used to oversee. Despite the recent setback, MLIT officials continue to look for ways they can maintain control over the market, and they remain suspicious of permitting private sector involvement in civil aviation decision making. SCHIEFFER