Japan economy waiting for an Olympics boost

JAPANESE Foreign Minister Fumio Kishida begins an official visit to Latin America today, starting in Brazil, but the high point of his trip will come on Saturday in the Argentinian capital of Buenos Aires with the announcement of whether or not Japan will host the 2020 Olympic Games.

There is a lot riding on the decision, which some say could see Japan's economy ride a wave of economic success that stretches beyond the benefits of Abenomics and into a period of soaring land and property prices in Tokyo and elsewhere and of surging tourism and consumer confidence.

Mr Kishida's extended visit to Latin America - lasting more than one week - will allow him to do some last-minute lobbying among members of the International Olympic Committee (IOC) to sell Tokyo's case to host the games against strong competition from Madrid and Istanbul.

Some reports suggest that Tokyo is gaining an edge over its rivals in the bid to host the games because of Japan's "organisational ability", but IOC vice-president Thomas Bach said last week that the presentations in Buenos Aires would be crucial because of the closeness of the competition.

Rio de Janeiro is a significant first stop for the Japanese foreign minister because it will host the next Olympic Games in 2016 and sources say that Japan is anxious to learn logistical lessons from Brazil's second largest city on the assumption that Tokyo will take over the baton in 2020. Japan's relations with Brazil hinge on more than a shared interest in hosting the Olympic Games. Cultural ties were boosted by large scale migration of Japanese farmers and others to Brazil a century ago and there are now 1.5 million people of Japanese descent living in the country.

But while Mr Kishida will be seeking to boost political and economic ties with Brazil - including a possible future Strategic Economic Partnership between the two countries - his diplomatic efforts in Buenos Aires will be what captures most attention in Japan and overseas. Most Japanese are expected to be glued to their television sets from crack of dawn next Sunday to see the outcome of Tokyo's Olympic bid.

Tokyo has appeared to have a headstart on competitor national capitals until recently on the ground that it is not only a well-run city but also one of the safest in the world. But the renewed flare-up of internationally publicised radiation problems at the crippled Fukushima nuclear complex some 240 kilometres north-east of Tokyo has sparked speculation that public safety could become an issue in the Japanese capital.

Tokyo last hosted the Olympic Games in 1964 and the subsequent surge in Japanese economic growth was put down partly to this event which cast Japan in a favourable light internationally and is credited with being one factor in the nation's highly successful drive into world export markets.

For Prime Minister Shinzo Abe especially, Tokyo's aggressive bid to host the Olympics in seven years' time chimes well his mission to boost Japan's international political and diplomatic profile and to prove that "Japan is back" as a global economic power after a lost decade of stagnant growth and deflation.

Hosting the Olympics would require multi-trillion-yen investment in infrastructure in Tokyo and other parts of Japan, giving a major boost to the construction industry and services industries in general. A land and property price boom could also be expected, analysts say.

"It is possible that land prices in Tokyo will rise by 50 per cent," Daiwa Securities senior strategist Eiji Kinouchi in Tokyo was quoted by Reuters as saying while Kunihiko Sugio, chief investment officer at Invesco Asset Management, said a winning bid should help drive long-term growth in Japan as companies would be more likely to increase their capital expenditure.

"If Tokyo wins, corporate investment should be boosted, so it will be a big domestic driving factor which will benefit the Japanese market as a whole," Mr Sugio said.

Source: http://www.businesstimes.com.sg/premium/world/japan-economy-waiting-olympics-boost-20130902

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