Photographer: Kiyoshi Ota/Bloomberg

Japan's Cities Are Fighting for Funding to Revive Their Fortunes

  • The rules for municipal funding have changed, Ishiba says
  • Ishiba says Japan may need foreign labor with aging workforce

Winners and losers are becoming clear as Japan’s municipalities compete for subsidies to fight a population decline and revive their fortunes, says the head of the country’s regional revitalization efforts.

QuickTake Abenomics

Cities and towns that propose ambitious plans with specific targets to meet these goals are getting money from the central government, said Shigeru Ishiba, Japan’s minister of regional revitalization. He won’t ease the competition just to woo voters in summer national elections, said Ishiba, 58, who formed a group of lawmakers last year with an eye toward trying to succeed Prime Minister Shinzo Abe.

Ishiba wants municipalities to stop assuming the central government will provide money for projects. Japan no longer has enough funding to create jobs in the regions through public works or abundant subsidies, he said.

“This is a competition,” Ishiba said in an interview on Monday in Tokyo. “We’ve been issuing subsidies by measuring local ingenuity. Some got a full amount; others got nothing. The gap is getting huge.”

Ishiba aims to help regions that are being hollowed out by young people’s migration to Tokyo and other major cities. Japan’s population stood at about 127 million as of Jan. 1, according to the statistics bureau. With even the number of residents in Tokyo forecast to decline, the nation’s population is projected to fall below 100 million in 2048, according to the National Institute of Population and Social Security Research. Abe’s administration has a long-term goal of keeping the population above 100 million people.

No Silver Bullet

There’s no silver bullet in fighting regional depopulation after municipalities for decades heavily relied on the central government to bring prosperity. With the national debt exceeding 1,000 trillion yen ($8.47 trillion), the formula of handouts no longer works, Ishiba said.

Projects that have recently received subsidies include local plans to boost tourism, branding efforts for local products, and initiatives to encourage entrepreneurship, according to the cabinet office. In addition, in the proposed 96.7 trillion yen budget for the fiscal year starting in April, the government plans to spend 100 billion yen to back up local revitalization initiatives after securing the same amount for the current fiscal year, according to the finance ministry.

Meanwhile, public works spending is set to be unchanged at 5.97 trillion yen.

“You need to figure out what to do with your own region,” said Ishiba, who has previously served as minister of defense and of agriculture. “Those who got it and started taking action are seeing their medical bills fall, their population decline come to a halt and the number of tourists increase. But that’s yet to change the entire Japan.”

The regions are increasingly facing a worker shortage. Women and elderly workers are picking up some of the slack, but that may not be enough in the long run, Ishiba said.

“I think Japan needs young energy and outstanding viewpoints from abroad,” he said. “In the long term, it’s not just Japan that faces labor shortage. South Korea and China may see it happen at a great scale. When that happens, we may be saying please come to Japan rather than shunning them.”

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