Japan Panel Calls for Boost in Long-Term Public Works Investment

Tokyo, April 28 (Jiji Press)–Private-sector members of a key Japanese government panel have called for a review of an indicator used to assess the appropriateness of public works projects in order to encourage long-term infrastructure investment by local governments and other entities. “We need to build a strong regional economy in order to make the Japanese archipelago strong and prosperous,” Prime Minister Sanae Takaichi said at Monday’s meeting of the Council on Economic and Fiscal Policy. Takaichi instructed relevant cabinet ministers to strengthen crisis management investment to make the Japanese homeland more powerful. Members of the panel, chaired by Takaichi, discussed reforms to secure necessary public investment to build a sustainable regional economy, at a time when aging social infrastructure such as roads and bridges is becoming a problem in Japan. Private-sector members called for effective preventive maintenance and prioritized budget allocation. In adopting public works projects such as road development, the government works out the costs and benefits by applying a certain social discount rate on the grounds that the value of benefits gained will become reduced with time due to factors such as rising prices. Currently, the discount rate is set at 4 pct, which uses the 10-year Japanese government bond real yield of 2004 as a reference. Pundits have pointed out that, by continuing to use a rate that is higher than one that reflects the actual state of the economy, benefit estimates have been kept low, thus becoming a factor for limiting long-term infrastructure investment. Therefore, private-sector members of the panel called for a “timely and appropriate review” of the discount rate to ensure that it reflects factors such as changes in interest rates, apparently encouraging a reduction in the rate. Also discussed at the meeting were issues such as education and human resources development using artificial intelligence. There were calls to newly establish “kosen” technical colleges to secure human resources with backgrounds in science, engineering, agriculture and digital fields, as well as to moderate the size of universities in line with the declining population of 18-year-olds. END [Copyright The Jiji Press, Ltd.]