FACTBOX-Japan ruling party’s possible coalition allies

(For more stories on Japanese politics click [ID:nPOLJP])

July 13 (BestGrowthStock) – Japanese voters dealt Prime Minister
Naoto Kan’s Democratic Party (DPJ) a sharp rebuke in Sunday’s
upper house election, depriving it and a tiny ally of an upper
chamber majority less than a year after the DPJ swept to power.

The DPJ still controls the powerful lower house. But
policymaking will be complicated since it needs help from other
parties to push bills in the upper chamber as it struggles to end
decades of stagnation in the world’s No.2 economy and curb debt.

Kan said his party would ask opposition parties to cooperate
on a policy-by-policy basis rather than try to create a formal
coalition immediately. Credit rating agency Standard & Poor’s
warned on Monday it may cut Japan’s sovereign debt ratings if the
government’s fiscal position erodes further.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ See graphics: PM support falls over sales tax : http://r.reuters.com/myv63g Japan's massive public debt: http://r.reuters.com/sez92m Graphic on Japan poll results: http://link.reuters.com/tys86m For more stories on the Japanese politics: [ID:nPOLJP] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Below are possible coalition partners and their policies
(Japanese names in parentheses):


The PNP, the DPJ’s current partner, say it wants to stay in
the ruling coalition. The party won no seats in the election, in
which 121 seats were up for grabs in the 242-member upper
chamber. It now holds three seats in the chamber.

Headed by outspoken former banking minister Shizuka Kamei, it
wants stimulus spending of 100 trillion yen ($1 trillion) over
the next three years and has said the 5 percent sales tax should
not be raised before an economic recovery.

The conservative party began as a group of Liberal Democratic
Party lawmakers who opposed former Prime Minister Junichiro
Koizumi’s plan to privatise the postal system. The Democrats have
promised to pass a shelved bill to scale back postal
privatisation in the next session of parliament.


The reformist Your Party won 10 seats in the election and
will hold 11 seats in total in the upper house. It has ruled out
a coalition with the DPJ but has said it could cooperate on
policies such as getting the Bank of Japan (BOJ) to do more to
overcome deflation.

The party has suggested the BOJ share a price stability
target with the government and that the BOJ support funding for
small and medium-sized companies.

The party, headed by another former banking minister, Yoshimi
Watanabe, who left the then-ruling Liberal Democrats last year,
has promised not to raise the sales tax for another three years.

It says the government should first cut wasteful spending and
tap government reserves.


Japan’s third-largest political party, the New Komeito, holds
19 seats in the upper chamber after having won 9 seats in the
election. It has ruled out a coalition with the DPJ and has said
it will not cooperate on policies.

Founded by members of a Buddhist sect, Soka Gakkai, the party
favours drastic reform of the tax system, including the sales
tax, but has not specified by how much the sales tax should be

The party, which was the Liberal Democratic Party’s coalition
partner when it was in power, wants the government and the Bank
of Japan to cooperate to achieve inflation of 1-2 percent.


Headed by Yoichi Masuzoe, a popular former health minister
who left the Liberal Democrats in April, the party holds 2 seats
in the upper house. It says Japan’s finances will be
unsustainable without a sales tax increase to over 10 percent by

The pro-reform party has also called for a 1-2 percent
inflation target and favours lowering the corporate tax rate to
25 percent from the current rate of around 40 percent.


Led by former finance minister Kaoru Yosano and ex-trade
minister Takeo Hiranuma, the party wants to raise the sales tax
to 8 percent from 2012/13 before raising it to 12-15 percent
after the economy recovers.

The party of former Liberal Democratic Party lawmakers also
wants to lower the corporate tax to 30 percent from 2012/13. It
holds 3 seats in the upper chamber.


The LDP, ousted by the Democrats last year after more than 50
years of almost continuous rule, is the main opposition party.
The party, which has called for the sales tax to be raised to 10
percent, holds 84 seats in the upper house after having won 51
seats in the election.

Like the Democrats, LDP members range from proponents of
market-friendly reforms to those who favour a gentler capitalism.
Both are also home to diplomatic doves seeking closer ties with
Asia to pro-U.S. advocates of a bigger security role for Japan.

The party has ruled out the possibility of a grand coalition
with the DPJ.
(Reporting by Chisa Fujioka, Kiyoshi Takaneka and Yoko Kubota;
Editing by Michael Watson)

FACTBOX-Japan ruling party’s possible coalition allies