Japan Pushes Consumer Spending
Jan. 29, 1999
TOKYO (AP) _ Massive tax cuts didn't get the Japanese buying. Neither have trillions of yen in public works. Now Japan is trying the ultimate in fiscal policy: giving money away in hopes someone will spend it.
The government handed out shopping vouchers Friday in a city in southwestern Japan, the first part of a plan to put $6 billion in shoppers' hands nationwide by the end of March.
The project is Japan's most direct _ and desperate _ tactic yet to prod its tight-fisted consumers into spending their way out of the country's worst recession since the end of World War II.
Residents in Hamada, 435 miles southwest of Tokyo, turned out in droves to collect the stylish coupons, paid for by the central government and distributed by municipalities, mostly for use in local shops. Kyodo News agency reported 2,500 people showed up.
The 1,000-yen vouchers, worth the equivalent of $8.60, are designed locally. One version in a city near Hamada, called a ``Trillion Luck Ticket,'' sports cartoon characters dressed in festive robes and masks.
Elderly Japanese and those with children aged 15 or younger _ about 35 million people _ are eligible for $170 worth of coupons. The vouchers are good for six months, cannot be exchanged for cash and shoppers cannot get change for them. However, they can spend them on virtually anything offered by any local shop or service provider, including restaurants.
Despite the fanfare, however, the certificates have not inspired much hope for an economic recovery. Instead, many people feel the program is an act of desperation by a government bereft of any better ideas.
Toru Mantari, 37, an employee at a beer company in Tokyo, said he might not even bother to collect his share of coupons when they become available in the capital.
``This is just for show,'' he said, emerging from his office late Friday night in downtown Tokyo. ``It's such a small amount of money, it can't possibly help the economy.''
The Japanese economy could use some help.
The jobless rate in 1998 stood at a record-high of 4.1 percent and the economy shrank in fiscal 1997 for the first time in two decades. Bankruptcy debts hover at all-time highs.
At the center of the sour economic news is the pessimistic Japanese consumer. Economists say that a boost in domestic consumption would go a long way toward putting the country on the road to recovery.
That's not expected anytime soon, however. The government announced this week that wage-earner spending dropped 1.8 percent in 1998 _ the biggest decline since the oil-shock of 1974.
The government has already spent billions of dollars for tax cuts and on public works projects. More is coming: the draft 1999 budget boosts government outlay 5.4 percent.
The Economic Planning Agency announced Friday that consumer confidence was slightly up, but said it wasn't cause for much hope.
``We can't say that consumer sentiment has recovered,'' said Takafusa Shiyoya, the agency's administrative vice minister.
Some Japanese were even angry about the coupon plan, saying many recipients were likely to spend the vouchers instead of their own cash, and then put more of their own money in the bank.
Ako Nishimura, 34, a teacher in Tokyo who is not eligible for the vouchers, called them ``a ridiculous waste.''
``It costs money just to print these things and hand them out,'' she fumed. ``And where's that coming from? My taxes!''