JAPAN’S AND PUBLIC WORKS

NEW STIMULUS PLAN AIMS FOR IMMEDIATE EFFECT

Public works projects in emergency economic package could fall flat without private sector support

Takanori Yamamoto and Hiroshi Arimitsu

The Daily Yomiuri, January 13, 2013

The emergency economic stimulus package approved by the Cabinet on Friday, which centers on urgent public works projects, is aimed at achieving an immediate boost for the economy.

Prime Minister Shinzo Abe aims to overcome prolonged deflation with a three-pronged approach: a flexible fiscal policy, bold monetary easing by the Bank of Japan and a growth strategy. Whether these three will complement one another to jointly stimulate the economy will be a deciding factor in Japan's revival.

The latest package is the largest on record, excluding the stimulus measures adopted after the so-called Lehman shock in autumn 2008. "The government will put emphasis on urgent public works projects that can be implemented quickly and other measures to help expand the market," Abe said at a press conference on Friday.

The package centers on projects such as making schools and hospitals earthquake-resistant and repairing deteriorated bridges and tunnels. Deputy Prime Minister and Finance Minister Taro Aso said at the press conference, "Maintenance projects will help distribute money and jobs to local construction companies."

Only a few months will remain in the current fiscal year after the fiscal 2012 supplementary budget, which incorporates the emergency economic stimulus package, passes the Diet. Contracts for public works projects have to be completed before the start of fiscal 2013.

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