Japan’s recovery not felt at street level

Shop owner Kozo Ito, above, says that visitors to the “Shotengai” — or traditional Japanese shopping street — think there is a bank holiday because so many shops are shuttered. (AFP)
Updated 20 October 2017
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Japan’s recovery not felt at street level

TOKYO: Like every day for the past 40 years, Kunihiko Kato dusts down the shelves at his electrical goods shop and meticulously lays out his selection of batteries. But the customers have long since gone as Japan’s economy languishes.
“We used to sell a lot of TVs, but now...” tails off the 76-year-old glumly, as he recalls Japan’s world-beating “bubble” economic boom in the 1980s.
“We have been going downhill for a long time,” Kato tells AFP.
Reviving the once-great Japanese economy is the key domestic battleground of Sunday’s election, with Prime Minister Shinzo Abe touting his trademark “Abenomics” policy as the best way to secure the country’s future.
Abe says his “Abenomics,” a combination of ultra-loose monetary policy and big fiscal spending, has resulted in strong growth and solid business confidence in the world’s third-largest economy.
On the face of it, the Japanese economy is in relatively robust health, enjoying its longest period of expansion in more than a decade, with low unemployment and the stock market at a 21-year high.
But this masks a seemingly unwinnable fight against deflation and a mountain of debt twice the entire economic output of the country.
And at Kato’s shopping area in Tokyo, there is precious little sign of the benefits of “Abenomics.”
One shop owner, 67-year-old Kozo Ito, says that visitors to the “Shotengai” — or traditional Japanese shopping street — think there is a bank holiday because so many shops are shuttered.
“I tell them: ‘No, they have just shut down’,” he says.
Like Kato, Ito reflects wistfully on the post-war boom times that extended into the 1970s and 1980s.
Ito tells AFP that he now makes in one month what he used to make in a day at his butcher’s shop, opened by his father in the year he was born.
He snorts at the idea that “Abenomics” has improved lives for ordinary people.
“I don’t feel it’s real. There is a widening gap between workers at big companies and those on temporary contracts.”
Throughout the street, elderly shopkeepers said the same story, of a steady decline, reflecting a pattern seen in the wider economy.
Michiko Hachiman, 72, said her clothes shop used to be packed in the evenings but complained that young people cannot afford her boutique offerings, preferring to pick up fashion items at cheaper stores.
“On a good day, when I was just married, we had lots of customers here in the evening because there were many meat and deli shops. I miss those days but they will not come back,” she said.
She said the effects of “Abenomics” were not trickling down to street level.
“The economy might be good for big companies but they are keeping all the profits and aren’t sharing them with the employees, right?
She said her sons “don’t really see their pay rising for all their hard work.”
Hachiman put her finger on another key election battleground — in fact the reason Abe called the vote — a lack of support for childcare provision that is keeping many young women out of the labor force.
Young people nowadays simply cannot afford to have children, she argued.
Despite the economic expansion, median household income stood at 4.28 million yen ($38,000) in 2015, according to the latest available figure, a drop of 20 percent compared to two decades ago.
Abe has vowed to use part of a planned sales tax hike to make some childcare facilities free of charge, arguing that a declining working-age population faces having to support a rapidly aging society.
His main opponent, popular Tokyo governor Yuriko Koike, has called for a freeze in the sales tax hike, arguing it could throttle growth.
Yuichiro Yanai, an economist at Barclays, noted Japan had a rare opportunity to raise taxes, given a strong economy, low unemployment and solid government.
“If not now, then when?” said the economist, adding that there was a clear need to swell the coffers.
Abe says he will start a “productivity revolution” through measures ranging from deregulation to tax reform in order to boost people’s income.
But for Kato, the electrical goods shop owner, these are nothing but empty slogans.
“We may not be making enough efforts on our own... but they can’t say how they (the reforms) could reach us,” he said.
“It always sounds like somebody else’s business to me.”


Kuwait sovereign fund’s UK unit to buy NSMP for $1.7bn

Updated 7 sec ago
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Kuwait sovereign fund’s UK unit to buy NSMP for $1.7bn

  • London-based infrastructure investment arm of the Kuwait Investment Authority fought off rival bids to buy oil and gas pipeline firm
  • NSMP owns a 67 percent interest in the SIRGE pipeline that transports natural gas from the West of Shetlands basin

The British infrastructure arm of Kuwait’s sovereign wealth fund has agreed to buy oil and gas pipeline firm North Sea Midstream Partners (NSMP) for around £1.3 billion ($1.7 billion) from ArcLight Capital, according to two sources.
Wren House, the London-based infrastructure investment arm of the Kuwait Investment Authority (KIA), fought off bids from JP Morgan, Blackstone, and private equity fund KKR to buy NSMP, according to one of the sources.
“Wren House was bidding against some very big players and they simply offered the best terms,” said the source. A spokesman for Wren House could not be reached for immediate comment.
Its bid was lower than one other but it offered better overall terms, according to one of the sources.
The current management team, including NSMP CEO Andy Heppel, will remain, the source said.
NSMP was valued at around £1.2 billion to £1.3 billion ($1.6 billion to $1.7 billion), the sources said.
Bank of America Merrill Lynch advised ArcLight on the transaction. Patrick de Loe, Merrill’s managing director of EMEA infrastructure, declined to comment.
Freshfields Bruckhaus Deringer was ArcLight’s legal adviser. Wren House was advised by Jefferies and Macquarie Capital. Its legal adviser was Slaughter and May.
The Sovereign Wealth Fund Institute ranks KIA as the world’s fourth-biggest sovereign fund, managing $592 billion. Only Norway, China and United Arab Emirates have bigger sovereign funds.
Wren House is headed by Hakim Drissi Kaitouni, a former investment banker who worked at Bank of America Merrill Lynch in London and New York.
Its other investments in the United Kingdom include stakes in Associated British Ports, London City Airport and Thames Water.
NSMP owns a 67 percent interest in the SIRGE pipeline that transports natural gas from the West of Shetlands basin and a 100 percent interest in the FUKA pipeline which transports gas from the SIRGE pipeline and various fields in the northern and central North Sea.
NSMP also owns the St. Fergus Gas Terminal and Teesside Gas Processing Plant. NSMP counts the Rhum gas field, in the North Sea and which is 50 percent owned by the Iranian Oil Company, among its clients.