Japan PM ratings at risk on economic reform doubts

Tokyo, Dec 8: Japanese Prime Minister Shinzo Abe may well behappy to leave domestic headaches behind as he leaves today for agathering of Asian leaders in the Philippines.

Abe's popularity, recently dented by doubts over his commitment toeconomic reform, could take another hit after a compromise with hisruling party over a plan to broaden the use of revenue from taxesearmarked for road construction.

''There was a lingering suspicion that Abe might be interested ineconomic reform,'' said Richard Jerram, chief economist at MacquarieSecurities (Japan). ''This helps quash any lingering naivete that mightbe out there.'' Abe, 52, easily won a September race to succeedJunichiro Koizumi as prime minister after ruling party lawmakers andrank-and-file backed him as their best bet to lead into an upper houseelection next July.

A security hawk who wants to rewrite Japan's pacifistconstitution, Abe won kudos for fence-mending visits to Beijing andSeoul soon after taking office.

But his popularity ratings suffered a blow from his decision latelast month to let 11 anti-reform lawmakers back into the ruling party,just a little over a year after Koizumi kicked them out for opposingpostal privatisation, the keystone of his agenda to shrink the role ofgovernment in the economy.

Attention then shifted to Abe's battle with ''road warrior''lawmakers in his Liberal Democratic Party (LDP) -- long fond of wooingvoters with often wasteful public works -- as a test of his resolve onreform.

Under today's compromise, the government will next year craft amid-term plan for ''truly necessary'' road construction and maintenanceand will also revise related laws to change the system, whichautomatically sets aside tax revenue from gasoline tax and certainother tariffs for road construction.

After allocating revenues for needed road-related spending, extrarevenue would be diverted to general use each year, to cope with suchitems as rising social welfare costs.

Reuters