JAPANESE MORNING PRESS HIGHLIGHTS 2/19/09

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 2/19/09

Index:

1) Top headlines
2) Editorials
3) Prime Minister's daily schedule (Nikkei)

4) Aso Cabinet support rate now at only 13 PERCENT in Kyodo poll
(Tokyo Shimbun)

Aso diplomacy:
5) Sakhalin-2 project set to start, with natural-gas output bound
for Japan (Yomiuri)
6) Meeting with Russian President Medvedev, Prime Minister Aso
achieves no progress on the Northern Territories entry issue, though
talks to continue (Tokyo Shimbun)
7) Text of exchanges between Aso and Medvedev (Yomiuri)
8) Aso's weak political base hampering his diplomacy (Yomiuri)

Politics and the budget:
9) Ruling camp hopeful the fiscal 2009 budget bill will pass the
Lower House prior to Prime Minister Aso's U.S. trip for a Feb. 24
summit with President Obama (Nikkei)
10) Finance Minister Yosano at the Lower House Budget Committee
worries whether the economy will be able to pull out of its deep
slump (Nikkei)
11) Yosano will only hold two cabinet portfolios until the budget is
passed (Nikkei)
12) Yosano will skip the ASEAN plus three meeting of finance
ministers (Asahi)

Politics in disarray:
13) At least 30 prefectural chapters of the LDP will go along with
Aso at the helm in the upcoming Lower House election (Asahi)
14) But an increasing number of junior to mid-level LDP lawmakers do
not want to go into the next election under Prime Minister Aso
(Asahi)
15) Former Prime Minister Koizumi in angry statement says he will
absent himself should there be a Lower House override vote on the
cash-handout package (Yomiuri)
16) LDP's Koichi Kato, a former friend of Koizumi, urges party
members to distance themselves from the former prime minister's
rebellious stand (Asahi)
17) Four opposition parties decide to pursue Aso's responsibility
for appointing Shoichi Nakagawa, who has just resigned his finance
minister's seat in disgrace (Yomiuri)

18) Whether the U.S' Big 3 automakers restructure or collapse will
have a major impact on Japanese parts makers (Mainichi)

Articles:

1) TOP HEADLINES

Asahi:
Local LDP executives found reluctantly supporting Aso in survey

Mainichi:
Clinical training period for new doctors may be shortened to a year
from two years

Yomiuri:
Compulsory curricula for doctor training to be halved

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Nikkei:
Housing plan could help up to 9 million households under U.S.
measure

Sankei:
Spring labor-management wage negotiations start; Toyota management
plans no pay-scale increase; Lowering wages a real possibility

Tokyo Shimbun:
Fixed asset taxes on 79 Kampo no Yado inns totaled 85.6 billion yen,
seven times the book value

Akahata:
Prime minister held responsible for appointing Nakagawa, defending
him, and Diet in turmoil

2) EDITORIALS

Asahi:
(1) Japan-Russia summit: Maximize the opportunity
(2) Trial of Pol Pot's torture begins: A big step toward national
reconciliation

Mainichi:
(1) Japan-Russia summit: What does "creative approach" mean?
(2) Explanation necessary about why Yosano has to concurrently serve
as finance minister

Yomiuri:
(1) Japan-Russia summit: Set the stage for advancing territorial
talks
(2) Will U.S. President offer additional support to automakers'
rebuilding plans?

Nikkei:
(1) Big Three's rebuilding efforts still in turmoil
(2) What is creative approach for Japan and Russia?

Sankei:
(1) Aso-Medvedev talks: Return of four islands must remain as
national principle
(2) Truth about Kampo no Yado inn bidding process must be uncovered

Tokyo Shimbun:
(1) Wage hike demand in recession carries significance
(2) Koto Ward murder trial: Consideration must be given to feelings
of victim's family

Akahata:
(1) Education Rebuilding Council report: Change necessary over
structural reform

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, February 18

NIKKEI (Page 2) (Full)
February 19, 2009

07:21
Left Haneda on ANA airplane.

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Morning

(local time)
Arrived at Yuzhno-Sakhalinsk airport in Russia.

Arrived at Pacific Plaza Hotel in Yuzhno-Sakhalinsk City.

Held meeting with Russia President Medvedev at Sakhalin Oblast
Government Hall.

Afternoon
Attended opening ceremony for Russia's liquefied natural gas
production plant in Prigorodnoye. Inspected LNG carrier.

Evening
Departed Yuzhno-Sakhalinsk on ANA airplane.

18:20
Arrived at Haneda.

18:54
Singed in at Imperial Palace to report his return.

19:11
Met with Chief Cabinet Secretary Kawamura at his official resident.


4) Poll: Aso cabinet's support rate at 13 PERCENT

TOKYO SHIMBUN (Page 1) (Abridged)
February 19, 2009

The rate of public support for Prime Minister Taro Aso and his
cabinet dropped 4.7 points from January to 13.4 PERCENT in a
telephone-based spot nationwide public opinion survey conducted by
Kyodo News on Feb. 17-18. The figure is the second lowest level,
following the all-time low of 6.5 PERCENT for the Mori cabinet that
stepped down in 2001. The nonsupport rate was 76.6 PERCENT , jumping
5.7 points in only 10 days from the last poll. The support rate has
fallen at an accelerated pace, and the Aso cabinet appears to be in
its last stage.

In the survey, respondents were asked when they would like the House
of Representatives to be dissolved for a general election. To this
question, the answer "right away" accounted for 32.0 PERCENT , and
"around April after the budget for fiscal 2009 clears the Diet" was
at 38.8 PERCENT . As seen from these figures, a total of 70.8
PERCENT want the Diet dissolved by April, up from 62.3 PERCENT in
the last poll.

Asked about the desirable form of government, 53.4 PERCENT chose a
coalition government centering on the leading opposition Democratic
Party of Japan (Minshuto),with 28.1 PERCENT picking a coalition
government centering on the ruling Liberal Democratic Party. In the
public preference of political parties for proportional
representation in the next election for the House of
Representatives, the DPJ scored 40.2 PERCENT , followed by the LDP
at 23.9 PERCENT . In the breakdown of public support for political
parties as well, the DPJ stood at 33.6 PERCENT , with the LDP at
27.2 PERCENT .


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Respondents were further asked to choose between Prime Minister Aso
and DPJ President Ichiro Ozawa as more appropriate for prime
minister. In this public choice, Ozawa marked 46.4 PERCENT , with
Aso at 20.4 PERCENT . Ozawa outdistanced Aso with the widest gap
under the Aso government.

In the breakdown of public support for other political parties, the
New Komeito was at 3.5 PERCENT , the Japanese Communist Party at 2.8
PERCENT , the Social Democratic Party at 3.0 PERCENT , the Reform
Club at 0.1 PERCENT , and "none" at 25.7 PERCENT . The New Party
Nippon gained no support from respondents.

5) Russian Sakhalin-2 plant starts operation for Japan-bound LNG

YOMIURI (Page 1) (Full)
February 19, 2009

Yuzhno-Sakhalinsk, Daisuke Segawa

With the start of operations of the Sakhalin-2 oil and natural gas
exploration project off Sakhalin in the Russian Far East on February
18, Russia's first ever liquefied natural gas (LNG) production has
moved into full swing. Approximately 5 million tons, 50 PERCENT of
the annual output of 9.6 million tons, are bound for Japanese power
and gas companies, such as TEPCO. The Sakhalin-2 project will serve
as a new supply source of LNG, demand for which is expected to grow.
Exports to Japan will likely start in March.

Prime Minister Aso and Russian President Medvedev attended a
ceremony to start the operation held the same day in Prigorodnoye in
southern Sakhalin. Aso stated, "It was Japan's long-cherished dream
(to procure energy from a neighboring country)." Medvedev also
underscored his view that the nation's LNG production will
contribute to global-scale energy security.

6) Japan-Russia summit

TOKYO SHIMBUN (Page 1) (Slightly abridged)
February 19, 2009

(Kei Sato, Yuzhno-Sakhalinsk)

Prime Minister urged Russian President Dmitry Medvedev in their
meeting on Feb. 18 to resolve the issue in which Japan canceled
humanitarian aid as Russia has demanded that Japanese government
officials on a humanitarian mission submit disembarkation cards
before landing on one of the four northern islands. But he failed to
solicit more than an agreement to continue working-level
negotiations.

Aso brought up this issue, with this remark: "This project is
important from the viewpoint of fostering mutual trust. I want to
confirm both countries' willingness to continue this project."
Medvedev just replied: "I appreciate Japan's humanitarian
assistance. I will instruct our officials to try to resolve the
issue in a friendly and constructive manner."

Japan is aiming to settle the issue by May, when a visa-free
exchange visit program will be launched between Japanese citizens
and current Russian residents of the Northern Territories. If
negotiations are prolonged, however, territorial negotiations will
be inevitably affected.

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In their meeting, both leaders agreed to speed up negotiations on
the territorial dispute "with a new, creative and flexible approach
during our generation." Medvedev proposed "a creative approach."

The two leaders agreed to realize a visit to Japan by Prime Minister
Vladimir Putin. They also decided to push ahead with coordination
for them to hold bilateral meetings at the second financial summit
in London on April 2 and at Group of Eight (G-8) Summit in Italy in
July.

7) Gist of Japan-Russia summit

YOMIURI (Page 4) (Full)
February 19, 2009

(Northern Territories issue)

Prime Minister Aso: We should aim at reaching a final conclusion
with a new, creative and flexible approach, based on our past
agreements and documents.

President Medvedev: We must continue efforts to reach an agreement
acceptable to both sides.

Both leaders: We will instruct our working-level officials to speed
up practical work so that we can resolve the dispute during our
generation.

(E/D card issue)

Aso: The (humanitarian aid) project is important for the two
countries to build their mutual confidence. I would like to confirm
that the project will be continued.

Medvedev: I appreciate Japan's aid. I am determined to resolve the
issue in a friendly and constructive manner.

Both leaders: We will order our working-level officials to
accelerate practical work.

(Global economy)

Aso: I am concerned about a rise of protectionism, against the
backdrop of the ongoing global economic recession. I am apprehensive
about the Russian government's plan to raise tariffs.

Medvedev: We will make efforts in accordance with the agreement
reached in the financial summit, but there will be exceptions.

(Bilateral relations)

Both leaders: Both countries will carry out coordination to set
bilateral meetings on the sidelines of the financial summit in April
and the Group of Eight (G-8) Summit in July, with the aim of
reaching an agreement during Prime Minister Putin's visit to Japan
in May.

(Far East Siberia development)

Both leaders: The two countries will discuss new possible joint
projects in the natural gas field.

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(Japan-Russia nuclear power cooperation accord)

Both leaders: We welcome progress in negotiations and will
accelerate them.

8) Aso's weak political base might negatively affect Japan's
position on diplomatic front

YOMIURI (Page 4) (Full)
February 19, 2009

The key to the survivability of Prime Minister Aso may lie in
whether he will be able to display his presence on the diplomatic
front. Major events are on his schedule, including a summit meeting
with U.S. President Obama, but some observers predict that as the
Aso administration become politically weaker, its diplomacy, too, is
likely to become weaker.

Speaking before reporters after he held talks with Russian President
Dmitry Medvedev on Feb. 18, Aso expressed his resolve to make
efforts to resolve the Northern Territories issue. "It is
undesirable to leave the issue completely up to bureaucrats," he
said.

Following his meeting with visiting U.S. Secretary of State Hillary
Clinton on the night of the 17th, a number of important diplomatic
events are on Aso's schedule, including a meeting with U.S.
President Barack Obama on Feb. 24, a financial summit, a visit to
Japan by Russian Prime Minister Vladimir Putin, and a Group of Eight
(G-8) summit. An aide to the prime minister said: "I hope he will be
able to turn the tables through these events."

Clinton's Japan visit was a good opportunity for Aso to give a boost
to his administration. His meeting with Obama set for the 24th will
make Aso the first foreign leader to be invited by President Obama
to the White House. However, this has been sullied already by
Finance Minister Nakagawa's resignation for his awkward behavior
during a press conference after the Group of Seven finance ministers
and central bank governors' meeting.

Chief Cabinet Secretary Kawamura had to say in a press briefing
yesterday: "It was regrettable from the viewpoint of our national
interests."

In the upcoming diplomatic events, economic issues will surely take
center stage. Some persons take the view that the change of an
economic minister at this juncture is not a good message.

Further, former Prime Minister Koizumi, who is currently visiting
Russia, told reporters in Moscow on the 18th: "In diplomacy, it is
very important for a nation to keep its political base stable. The
political turmoil in Japan must be quelled as soon as possible." He
thus expressed his concern that Prime Minister Aso might be treated
lightly at diplomatic venues.

As suggested by Koizumi, the Aso administration has already met
disappointing views from overseas.

A correspondent who accompanied Secretary Clinton on her visit to
Japan asked a senior official of the U.S. State Department: "Why has
the Obama administration invited Aso? His administration has been

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suffering low public support rates and is unlikely to last much
longer." The senior official replied: "The president has invited him
not personally but as the Japanese prime minister. It is not related
to his popularity." But the Washington Post also reported that
Clinton's meeting with Democratic Party of Japan President Ozawa
reflected Washington's intention to diversify its risks.

9) Focus to be on whether Lower House committee can take vote on
fiscal 2009 budget before Aso visits Washington

NIKKEI (Page 2) (Full)
February 19, 2009

Whether the House of Representatives Budget Committee will be able
to take a vote on the fiscal 2009 budget before Feb. 24, when Prime
Minister Taro Aso meets in Washington with President Barack Obama,
has emerged as a new issue in maneuvering between the ruling and
opposition parties.

The Budget Committee decided yesterday on such schedules as holding
on Feb. 19-20 a sub-committee session and intensive deliberations on
the Aso cabinet policy line, as well as on social security policy.
Aso will today apologize for the resignation of Finance Minister
Shoichi Nakagawa. The ruling parties tried to pass the budget on the
20th in the Lower House, but they had to change their original plan
due to Nakagawa's resignation.

The ruling Liberal Democratic Party (LDP) and New Komeito, the LDP's
junior coalition partner, confirmed yesterday in a meeting of senior
party members that they would make efforts for an early passage of
the budget. The two parties also decided that instead of forging a
vote before the end of the week, they would put the budget to a vote
on the morning of the 23rd and have it passed by the Lower House in
the afternoon,.

A senior LDP member underscored: "It will be difficult to take a
vote on the 20th, but we will get the budget (through the Lower
House) on the 23rd." A senior New Komeito member added: "I hope the
budget will be adopted (in the Lower House) by the night of the 23rd
at the latest."

As for the reason the ruling coalition is dwelling on passing the
fiscal 2009 budget before Aso departs for Washington, a senior
ruling coalition member close to the prime minister pointed out:
"Under the current economic situation, it is not appropriate for the
prime minister to meet with the President with empty hands." It is
certain that if Aso holds a summit meeting before the budget is
passed, his administration would suffer another blow. Such could
result in exposing Aso's lack of leadership in Japan to the Obama
administration. After the passage of the budget, the government and
ruling coalition are looking into compiling additional economic
stimulus measures. In order to improve the atmosphere conducive to
accepting an additional economic stimulus package, Aso wants to pass
the budget in the Lower House before he leaves for the United
States.

However, if the ruling camp rams the budget through the Lower House,
chaos will reign in the Diet. The ruling coalition leaders intend to
make a final decision on the timing of vote-taking after carefully
watching what action the opposition bloc will take and public
opinion.


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The opposition camp is expected to try to prevent the bill from
clearing the Lower House before Aso visits the United States. There
is a hard-line argument in the opposition that if the ruling camp
takes a vote on the 23rd, the opposition will prevent it even by
such means as submitting resolutions to dismiss relevant chairmen.

10) Finance Minister Yosano concerned that economy will not come up
from bottom

NIKKEI (Page 2) (Full)
February 19, 2009

When asked in a Lower House Budget committee session yesterday about
the gross domestic product (GDP) plummeting at annualized pace of
12.7 percent in the October-December period, Kaoru Yosano, finance
minister, state minister for financial services and for economic and
fiscal policy, expressed strong concern, saying: "If this situation
continues further, the Japanese economy not be able to come up from
the bottom (soko-nuki)."

Four opposition parties, including the Democratic Party of Japan,
did not attend the session, demanding that Prime Minister Taro Aso
show up in the session to explain his view for his responsibility of
appointing Shoichi Nakagawa as finance minister.

Yosano stressed in the session:

"I will do my best to bring about economic recovery. In order to
protect the livelihoods of the people by implementing necessary
measures, an early enactment of the budget is important more than
anything."

He indicated that he would give top priority to an early passage of
the fiscal 2009 budget and related bills. He also said that the
basic direction toward sound public finance, as well as efforts for
boost the economy should be maintained. Aso was replying to
questions by Takashi Mitsubayashi, a member of the ruling Liberal
Democratic Party (LDP).

Chief Cabinet Secretary Takeo Kawamura apologized for the
resignation of Finance Minister Shoichi Nakagawa, saying: "It is
very regrettable that the minister in charge was replaced while the
Diet is deliberating the budget."

11) Chief cabinet secretary: Yosano will concurrently serve in three
cabinet posts until budget clears Diet

NIKKEI (Page 2) (Full)
February 19, 2009

At a press conference yesterday afternoon, Chief Cabinet Secretary
Takeo Kawamura indicated that Prime Minister Taro Aso will let Kaoru
Yosano serve in three cabinet posts -- finance minister, state
minister for financial services, and state minister for economic and
fiscal policy -- until the fiscal 2009 budget and related bills are
enacted. He stated: "I understand that he will serve in the three
posts for the time being." At a press conference yesterday morning,
he stated that Yosano would serve in those posts until the budget
and related bills cleared the Lower House.

12) ASEAN plus 3: Yosano to stay away; Government to consider
relieving him of burden of serving in two posts

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ASAHI (Page 4) (Abridged slightly)
February 19, 2009

State Minister for Fiscal, Financial and Economic Policy Yosano has
decided to absent himself from a foreign ministerial meeting of the
Association of Southeast Asian Nations, Japan, China and South Korea
(ASEAN plus 3) to be held in Phuket, Thailand on February 22. The
reason is because he will be occupied with Diet deliberations,
according to the Finance Ministry. International conferences and
Diet deliberations are expected to continue. It appears difficult
for Yosano to serve in the three ministerial posts concurrently.

For this reason, Chief Cabinet Secretary Kawamura during a press
conference on the 18th indicated the idea of relieving Yosano of the
burden of serving in three posts and appointing his successor. The
most likely plan is that Yosano will serve as finance minister and
state minister for financial services with his present post as state
minister for economic and fiscal policy succeeded by somebody else.

Participating countries will report the situation of their efforts
to address the global financial crisis at the upcoming ASEAN plus 3.
They will also confer on how to stem the impact of the crisis on the
region. Finance Ministry Parliamentary Secretary Suematsu (Upper
House member) will attend the meeting on behalf of Yosano.

Yosano during a press briefing on the 17th said, "I must attend
various international conferences as long as that will not disrupt
the management of the Diet."

Since the ASEAN plus 3 will take place soon after former Finance
Minister Nakagawa committed a blunder during a press conference
after a meeting of the Group of Seven finance ministers and central
bank governors (G-7),the Japanese finance minister's words and
action at an international conference is bound to draw attention of
foreign countries. It is necessary for Japan to restore the lost
confidence. However, it has already missed the chance.

13) LDP's local chapters reluctantly support Aso

ASAHI (Top play) (Abridged)
February 19, 2009

The Asahi Shimbun interviewed the ruling Liberal Democratic Party's
local chapter executives in the nation's 47 prefectures, including
Tokyo and Hokkaido, and asked them if they thought the LDP should
fight in the next general election under Prime Minister Aso or
otherwise under a new president and prime minister. In response to
this question, 30 LDP prefectural federations, or about two thirds,
preferred "Prime Minister Aso" in their answers. However, their
support for Aso was reluctant. "It's the same whoever may become
prime minister," said one local LDP leader in Tochigi Prefecture.
The LDP's local organizations, which elected Aso in the party's
presidential race with their overwhelming support for him, seem to
be at a dead end because they cannot dump him even though they may
want to.

Shoichi Nakagawa, a 'sworn' friend of Aso, has now quit as finance
minister. His resignation is spurring LDP lawmakers to distance
themselves from Aso. Given such a situation, the Asahi Shimbun
interviewed the LDP's prefectural federation secretaries general in
principle.

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As a reason for preferring Aso, there was also a positive view in
Tottori Prefecture, saying, "He is turning his eyes to localities as
well, and he will prove his worth from now." However, other local
leaders voiced reluctant views like "it's the same even if he's
replaced now" (Kumamoto Prefecture) and "there's no other
appropriate person to represent the party" (Nagano Prefecture). Aso
is the third politician to have become prime minister without a
general election. For this reason, there was also a view in
Hiroshima Prefecture, saying, "If we have a fourth one, the image
will go from bad to worse."

14) Junior and mid-level LDP lawmakers: "We can't fight in the next
election under Prime Minister Aso"

ASAHI (Page 4) (Full)
February 19, 2009

Approximately ten junior and mid-level lawmakers from the ruling
Liberal Democratic Party (LDP) who are critical of Prime Minister
Aso held a meeting yesterday in Tokyo. One by one, the attending
lawmakers expressed the view that they could not fight in the next
election under Prime Minister Aso. According to one attendee,
although all agreed to back the prime minister until the fiscal 2009
budget is passed, many expressed the view that they did want him to
be at the head of the party going into the next election, given his
extraordinary lack of leadership.

One participant told the press corps, "In the current wretched
state, even if we give it our utmost effort, we feel it would all be
useless." Another lawmaker said, "We probably have no choice but to
move to back another person for prime minister."

15) If second vote is to be taken on cash handout plan, Koizumi will
absent himself from plenary session

YOMIURI (Page 2) (Full)
February 19, 2009

Ken Makino, Moscow

Former Prime Minister Junichiro Koizumi, who is visiting Russia,
held a press conference in Moscow on Feb. 18. In it, touching on the
option of the House of Representatives taking a second vote on bills
related to the fiscal 2008 second supplementary budget, including a
cash handout program, Koizumi said: "If the ruling bloc is to use a
two-third majority in a plenary session, I will not attend it."
Although Koizumi had shown a cautious stance about readopting the
related bills, this is the first time that he has made it clear that
he would absent himself from the session.

Koizumi also said: "Prime Minister (Aso) and the party leadership do
not understand well how the ruling parties won the seats they have
today. Discussions should be carried out on whether there are other
ways to spend 2 trillion yen of tax money and on differing views
between the House of Representatives and the House of Councillors."
The comment is designed to discourage (Prime Minister Aso) from
easily using the two-thirds majority the ruling bloc won in the 2005
Lower House election when Koizumi was serving as prime minister.

Koizumi also indicated that he will not withdraw his plan to resign
from politics.

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16) Former friend Koichi Kato urges LDP members to distance
themselves from former Prime Minister Koizumi

ASAHI (Page 4) (Excerpt)
February 19, 2009

Liberal Democratic Party (LDP) lawmaker Koichi Kato, a former party
secretary general, in a recorded interview yesterday for Asahi
NewsStar, commented on former Secretary General Hidenao Nakagawa
having distanced himself from Prime Minister Aso: "He must not opt
for a neo-liberal economy by always teaming together with former
Prime Minister Koizumi." He criticized Koizumi and as a senior
lawmaker who had ended his friendship with him, advised others to
distance themselves from Koizumi.

17) Nakagawa resignation: Four opposition parties to pursue prime
minister's responsibility for appointing him as cabinet minister;
DPJ to demand resignation en masse

YOMIURI (Page 2) (Full)
February 19, 2009

In the wake of resignation of Shoichi Nakagawa as finance minister
and financial services minister, the Diet affairs committee chiefs
of four opposition parties -- the Democratic Party of Japan,
Japanese Communist Party, Social Democratic Party, and the People's
New Party -- met yesterday and agreed to intensely pursue Prime
Minister Taro Aso's responsibility for appointing Nakagawa as a
cabinet minister.

The House of Representatives Budget Committee decided at its
directors meeting yesterday to thoroughly discuss the matter on Feb.

19. The DPJ plans to demand that the cabinet resign en masse by
letting Deputy President Naoto Kan take the floor as the questioner.
DPJ President Ichiro Ozawa held a press conference in Toyama City
yesterday in which he said: "(Taro Aso) is no longer functioning as
prime minister."

Chief Cabinet Secretary Takeo Kawamura again apologized before the
Lower House Budget Committee yesterday afternoon, saying: "We are
deeply sorry for the changeover of the finance minister amid
deliberations on bills related to the fiscal 2008 second
supplementary budget and the fiscal 2009 budget."

18) Will Big Three undergo restructuring or go under? Collapse of
even one company will deal a blow to Japan's parts manufacturers

YOMIURI (Page 3) (Excerpts)
February 29, 2009

General Motors and Chrysler on February 17 (early hours of the 18th,
Japan time) submitted management reconstruction plans to the
government. The management of both companies has further
deteriorated due to the sluggish brand-new car market. The two
companies made a request for fresh loans only two months after
bridging loans by the U.S. government started. However, it is not
known whether the two companies can be resuscitated, even if
additional financial assistance is extended. President Obama will
likely be pressed to make a difficult decision.

If GM and Chrysler proceed with production cuts and plant closures,

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according to their management reconstruction plans, it will also
deal a heavy blow to Japanese parts manufacturers operating in North
America. Provided that even one company among the Big Three goes
bankrupt, Japanese parts manufacturers' business performances would
worsen. It will also have an adverse impact on Japanese automakers
with the procurement of parts from manufacturers under the umbrella
of the Big Three becoming stagnant, because they have increased the
ratio of locally procured parts. There is also concern that it would
lead to an increase in joblessness and a chain of bankruptcies of
subcontractor parts manufacturers.

According to the Japan Auto Parts Industries Association,
approximately 300 Japanese auto parts manufacturers are operating in
the U.S. Those companies' sales in North America stood at 3.4815
trillion yen in fiscal 2007. Of that amount, the proportion of sales
to the Big Three stood at between 12 PERCENT -13 PERCENT on
average. Such a ratio of some companies is reportedly even close to
50 PERCENT .

GM and Chrysler accounted for about 6 PERCENT or 230 billion yen in
the sales of Denso, the largest auto parts manufacturer. The company
mainly sold them car air-conditioners and engine-related parts.
Denso's sales to the two companies suffered a year-on-year drop of
30 PERCENT in the April-December period in 2008. A further decline
is estimated for the January-March quarter in fiscal 2009.

Many Japanese car makers, such as Honda Motors, which relies on the
North American market for 50 PERCENT of its sales on a consolidated
basis, Toyota Motors -- between 30 PERCENT -40 PERCENT , and Nissan
Motors, have boosted their business performances as the U.S. market
expands. All the more for that reason, they are strongly concerned
that the management crisis facing the Big Three could protract their
sluggish sales performances.

An executive of Toyota Motors noted, "(If even one of the Big Three
goes under,) it will deal a blow not only to the auto industry but
also to all industries, such as electronics and raw material
manufacturers." He stressed that the restructuring of the Big Three
is indispensable for the recovery of both domestic and foreign
economies.

ZUMWALT