Japan's post-tsunami revival plan reaches tipping point

TOKYO, Dec 13 (Reuters) - Nine months after a historic
magnitude 9.0 earthquake unleashed a deadly tsunami that wreaked
havoc across Japan's northeast, the nation, armed with $155
billion in funding, is entering a critical stage of the
rebuilding effort.


Damaged railways and major roads are mostly fixed with at
least temporary repairs, two-thirds of ruined ports have been
restored and 47,000 households moved from emergency shelters to
temporary housing.

Of 22 million tonnes of rubble, two-thirds have been cleaned
up, but final disposal remains a dangerous challenge because of
concerns about radiation that spewed from the crippled Fukushima
nuclear plant.

All the recovery efforts were made possible by initial
emergency budgets totalling 6 trillion yen ($77.19 billion).
Now Tokyo and local officials must produce a plan to "build
better" to give the region, long beset by a shrinking and ageing
population and lack of investment, a chance of revival.

The tsunami-hit area accounts for about 6-7 percent of
Japan's economic output, but the stakes are high for the entire
nation. Policymakers, investors and companies are counting on
the rebuilding effort to give the $5 trillion economy a jolt
needed to keep it from sliding back into recession under the
weight of a global slowdown and fears of contagion from Europe's
debt crisis.

People and businesses, pessimistic about the region's future
however, are packing up. More than 38,000 residents left the
area between March and August, the biggest exodus since 1969. Of
those that remain, 180,000 out of the region's 5.7 million
residents have filed jobless claims between March and October,
70 percent more than a year earlier.

"The people who evacuated the area after the disaster won't
feel compelled to return unless they can find stable jobs, so
reconstruction without job creation would be a failure," said
Hideo Kumano, chief economist at Dai-ichi Life Research
Institute.

"That money will finally flow in is a good news, but it is
not a guarantee of a self-sustaining recovery of quake-hit
areas."

So far the news is not encouraging. Plans to modernise the
struggling fishing industry or move coastal communities to
higher ground, a precondition for large-scale rebuilding and
investment, have been slow to materialise.

Overwhelmed local bureaucracies, opposition from fishing
cooperatives and the need to win the hearts and minds of
sceptical residents are getting in the way.

"Unless we can have accords with local people, we cannot
proceed with rebuilding projects because there is a possibility
of opposition," says a regional official in Miyagi, one of the
three prefectures worst hit by the March 11 disaster.
That means it may take months before rebuilding funds start
flowing to projects on the ground, local officials say.

OLD BUSINESSES, OLD PEOPLE
The national government is promising five-year tax holidays
and light-touch regulation on fishing rights, land use and other
issues to those who will invest in special industrial zones in
disaster-hit areas. Foreign businesses are also eligible.

Industrial parks focused on automotive parts or medical
equipment production as well as renewable energy projects such
as wind farms are among ideas proposed by Tokyo.

The process of deciding what to build and where has only
just started and only 10 out of 19 municipalities requiring
rebuilding in Miyagi prefecture have reconstruction plans ready.
In neighbouring Iwate, eight out of 12 have such plans.
Reconstruction experts say a shortage of qualified planning
professionals is one of the obstacles.

"The fact that many of quake-hit cities and towns are
scarcely populated has made it difficult for local officials to
create rebuilding plans on their own," said Yoshiyuki Aoki, a
senior official of the government's reconstruction office in
Tokyo.

He says that, whereas the 1995 Kobe quake hit residential
areas constantly under redevelopment, much of the northeast has
no recent history of re-zoning and city planning and lacks
experts. Tokyo wants to rectify that by sending a team of
specialists to help, Aoki says.

Re-establishing the fishing industry is another tough
question facing planners.

Cooperatives are defending a system that only loosely ties
fishermen with processing firms and retailers, but keeps rivals
out and Miyagi governor's initiative to open the business to
outsiders got drowned in protests.

Shigeru Tabeta, professor of ocean technology and
environment at the University of Tokyo who is assisting with
rebuilding of port towns, says preserving the status quo is
self-defeating.

Tax breaks and incentives will only work if Japan opens its
protected farming and fisheries to foreigners, experts say.
With no magic bullet in sight, spending more on a solid
safety net may be the only way to keep communities intact until
revitalisation plans materialize, says Iwao Sato, sociology of
law professor at the University of Tokyo.

His survey of the fishing town of Kamaishi showed more than
a third of residents were out of work, compared with a fifth
before the quake while the population of self-employed has
fallen to 17 percent from 28 percent.

"The government has mostly focused on building seabanks,
elevating land levels and other infrastructure development,"
Sato says. "But more attention is probably needed on supporting
the livelihoods of people through direct assistance on
employment and homes, or else people will leave."