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Business Leaders Welcome Ruling Party’s Victory

February 19, 1990

TOKYO (AP) _ Business leaders breathed a collective sigh of relief today at the governing party’s electoral victory, interpreting it as voter support for the policies that have brought economic prosperity to Japan.

But they warned that the scandal-plagued party still must do more to bolster public trust.

″I saw this election as a test for our nation’s liberalism, and my feeling of crisis had been growing,″ Eiji Suzuki, president of the Japan Federation of Employers Association, said in a statement.

Eishiro Saito, chairman of the powerful Japan Federation of Economic Organizations (Keidanren), told reporters: ″The decision by the people not to destroy the foundation of the free economy, the basis of Japanese economic growth to date, should be highly appreciated.″

He welcomed the Liberal Democratic Party’s renewed majority in Parliament’s lower house, but urged more discussion and mutual understanding between the governing and opposition parties for greater political stability.

Shun Ishihara, chariman of the Japan Committee for Economic Development, warned the Liberal Democrats that they should not think the public has forgiven and accepted all of their actions.

″The party has not fully improved. The Liberal Democratic Party still needs to be reborn in order to recover the public trust,″ he added.

The business community had been concerned about whether the pro-business governing party could keep control of the government after it lost its majority in Parliament’s less powerful upper house in elections last July.

Voters then registered their disapproval of a new 3 percent sales tax and a widespread influence-buying scandal in which many leading Liberal Democrats were implicated.

In Sunday’s election for the lower house, which names the prime minister and controls the budget, anger over the tax and scandal apparently had faded. In addition, many voters echoed the view of business leaders that the opposition Socialists were not capable of governing effectively.

The Liberal Democrats, who have governed Japan since their party’s founding in 1955, ended with a comfortable majority - 275 of the lower house’s 512 seats. The Socialists won 136.

″The outcome shows that the Liberal Democrats’ taxation policy, including their stance toward the sales tax, has been accepted by the people,″ said Rokuro Ishikawa, president of the Japan Chambaer of Commerce and Industry.

The Liberal Democrats have promised to review the tax, which took effect in April, and possibly lower the levy on groceries, rents and some other items. The opposition has demanded abolition of the tax.

Keidanren’s Saito supported the review of the tax, but added, ″I do hope the parliamentary session will not be disrupted over the consumption tax revision when the taxation system is gaining general acceptance.″

Since the opposition controls the upper house, a stalemate over the tax is possible.

The governing party also might face trouble in enacting legislation to deal with U.S.-Japan economic friction.

″It’s the most serious concern for me right now that the trade dispute between Japan and the United States will get worse,″ said Isao Yonekura, president of C. Itoh and Co., a leading trading company.

Despite the relief of business leaders over the Liberal Democrats’ victory, the Tokyo Stock Exchange’s leading index plunged today.

The 225-share Nikkei Stock Average rose more than 130 points in early trading, as final election returns came in, but then the market’s concern turned to the possibility of higher interest rates, a dampening factor on stock investment. The Nikkei ended at 37,222.60, down 237.72 points, or 0.63 percent, from last Friday.

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