Japan Plans to Increase Aid, Defense, and Social Spending in Proposed Budget

JAPAN's newly proposed budget is seen by analysts here as a signal to the United States and to others that Tokyo is becoming willing to shoulder more international responsibilities of a rich nation. The government's proposed $461.5 billion budget still awaits parliamentary debate and approval. The new budget is up 9.7 percent from last year's; this is the biggest hike in nine years, with the largest increases seen in overseas aid, social welfare, and defense.

The proposed budget also reflects an attempt by the ruling Liberal Democratic Party (LDP) to curry favor with voters as an expected lower house election in February approaches. The most politically sensitive item was the proposed 6.6 percent increase in social welfare spending.

This is the first time in the past 10 years that budgeting for social welfare exceeds that for defense. The ruling LDP hopes to persuade the general public that the sales tax introduced last April is a major source of revenue for the increase in social welfare benefits. The party, which lost the majority at last July's upper house election, hopes to gain support over the same issue at the coming election.

Defense spending would be increased by 6.1 percent under the proposed budget. An initial 5.5 percent defense increase had been planned, according to Finance Ministry officials. But some observers say the government felt the need to meet increasing US demands for more spending on the military.

``Japan's defense spending will continue to grow as the US spending is reduced,'' says Seizaburo Sato of the International Institute for Global Peace. One reason for the proposed hike in defense spending was a 1987 commitment to the US for Japan to assume the costs of Japanese laborers at US military facilities in Japan, as well as improvements in the facilities. Next year's military budget will also be the last year to meet a target, set in 1985, to upgrade Japanese defenses.

The new defense budget foresees procurements for one Aegis destroyer and 30 new-design tanks. Also included are moneys for the joint Japan-United States development of the FSX jet fighter.

The government estimates that the ratio of military spending to gross national product will dip below 1 percent. This would mark a change from the last three years, when the ratio was above 1 percent.

The overseas development aid will increase by 8.2 percent, with most of the proposed increases earmarked for debt relief to third-world nations. The government also intends to boost the aid spending for East European countries, such as Hungary and Poland, which don't fall into the current recipient category for overseas development aid.

Among other budget items, the International Trade and Industry Ministry (MITI), concerned about Japan's huge trade surplus, persuaded the Finance Ministry to set a $100 million budget for a new program to boost imports into Japan. This budget item would be used to establish nationwide network centers and to dispatch experts overseas for information exchange.

In addition, a new tax credit will be introduced for any manufacturer that increases nontariffed imports by at least 10 percent. With elimination of tariffs on about 1,000 products and an increased loan quota for foreign firms' export promotion, the ministry expects to raise yearly imports by about $3 billion.

MITI hopes that expansion of imports will help improve Japan's complicated distribution system. The US has urged Japan to increase its imports. A ministry official said the measure is ``a very important means to correct structural problems.''

Although the US has also urged Japan to increase its public investments, the proposed budget for public works only climbed 0.3 percent. The Finance Ministry explained that Japan was fully aware of US demands, but said that the smooth economy should not be heated up.

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