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Dysfunctional economic planning dooms Okinawa to vicious circle of poverty

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"To regard its economy is frightening indeed," writes Ganji Nishimoto in Kami no Bakudan (Dec), in his report on the "Hidden Poverty" on Okinawa, where the unemployment rate is nearly double that of mainland Japan -- over 5% for Okinawa as opposed to around 3% for the mainland.

The island's economy never really emerged from the prolonged "Heisei recession." A staff member at a local Hello Work job placement office tells Nishimoto he believes the actual unemployment is probably "over 10%."

Poverty affects children in 37.5% of Okinawa's households -- a rate 2.7 times that of the 46 prefectures on the mainland. The prefecture also ranks top in Japan in terms of the percentage of people employed in non-regular jobs, at just under 45%, and its average annual income is about 70% that of the mainland.

Because poverty is becoming ingrained, fewer families can afford to pay for their children's tuition at a university or occupational specialty school, which effectively rules out the chances for a professional or white-collar career. 

While many of the island's young women aspire to respectable jobs in the entertainment industry, visits to drinking establishments or sex businesses in mainland Japan will find many Okinawa natives so employed.

A key reason for the island's poverty is sheer distance: Because of its long distance from the mainland, costs for transportation are high. Take Toyota, which operates an assembly plant in Iwate Prefecture. If cars each composed of 30,000 components were to be assembled in Okinawa, production costs would go up considerably. By the same token, exports from the island simply cannot compete in the international marketplace.

Alas, the idea at the time of reversion to develop Okinawa as a tourist destination failed to pay off. Once the value of the Japanese yen began rising against the U.S. dollar, travelers shifted to more affordable beach resorts in other parts of the pacific.

True, in recent years more visitors have been arriving from China, but from last year, trade friction between China and the U.S., along with slowing of growth of China's economy, has put the Okinawans on edge.

Whether pro or con, the issue of the U.S. bases dominates Okinawa's politics in the eyes of both mainland Japanese and the locals, to the extent that it obscures the other economic problems that are responsible for creeping poverty.  

While the economies of cities and towns on the Japanese main islands that are located close to U.S. bases do not struggle with poverty, such is not the case for Okinawa. The prefecture's population, at 1.43 million, ranks 23rd out of Japan's 47 prefectures, but it faces an impasse: on the one hand, its economy is "too small" to function as an independent entity, but unlike the Ogasawara islands or Tsushima in Nagasaki, Okinawa is treated by the central government as being "too big" to justify subsidies.

Nishimoto is convinced that as long as Okinawa keeps its status as full-fledged Japanese territory, it will be unable to achieve economic independence. Governor Denny Tamaki has proposed some radical ideas to improve its lot: How about emulating the Chinese slogan of "one country, two systems," for example, allowing it to eliminate all duties on foreign imports and the 8% (soon to be 10%) consumption tax? Or, even to allow it to issue its own currency, the "Okinawan yen," whose value could be set at 30% to 50% below that of Japan's currency. This would halve the cost for package tour visitors and serve as a magnet for visitors from both Japan and neighboring foreign countries.

Devalued currency would also reduce Okinawa's labor costs, thereby immediately creating a pool of workers fluent in Japanese, who would make it unnecessary for Japanese manufactures to locate plants abroad.

Summing up, says Nishimoto, Okinawa's people do not desire a complete independence from Japan, but rather an economic policy that gives them a greater degree of autonomy. And rather than a unilateral policy by which the Japanese government dictates policy re the U.S. bases therein, it would no doubt prefer to approach the issue from the perspective of a three-way negotiations involving Japan, the U.S. and "the autonomous state of Okinawa."

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How about emulating the Chinese slogan of "one country, two systems," for example, allowing it to eliminate all duties on foreign imports and the 8% (soon to be 10%) consumption tax? Or, even to allow it to issue its own currency, the "Okinawan yen," whose value could be set at 30% to 50% below that of Japan's currency. 

That's actually a great idea, and very forward thinking. The same plan could be used in many places around the world, including the USA. Decentralization allows each region to make the most of what it has, and to run itself in a way that benefits locals. Top down control from a remote and powerful capital is an obsolete model in today's world.

9 ( +10 / -1 )

As a frequent tourist to Japan, I've often thought of visiting Okinawa. The only thing that caused me to drop the idea was the expense of accommodation. Not the airfare to get there from mainland Japan. But, compared to mainland Japan almost everything is more expensive. I think the author's observations and ideas are very good.

3 ( +3 / -0 )

Tourism is a very low paying sector.

We used to go to Okinawa in the offseason, but we would stay in big hotels with great rooms and big resort hotel breakfasts for the same price as a tired-looking pension with tiny rooms and a rubbish breakfast somewhere near a ski resort on Honshu on a weekday. On a weekend, the pension would be more expensive. My impression of accommodation in Okinawa is that it is cheap for what you get.

2 ( +2 / -0 )

On my last visit to Okinawa I made the mistake of going in July. It was already early in the typhoon season and a powerful typhoon decided to pay a visit. My ANA flight to Haneda departed in pouring rain and heavy winds, the last one out of Naha for the next several days, and anyone who was scheduled to leave was stranded there, previously made air and hotel reservations notwithstanding.

Like tourists from mainland Japan I used to enjoy browsing at the funky shops for GIs on the strips outside the US bases, like BC Street (BC stood for Business Center) by Kadena's Gate 2 in what used to be called Koza (now Okinawa City). As the yen currency climbed in value against the US dollar these items became less affordable and it's rare to find much of anything still made in Okinawa, except maybe Orion beer and martial arts implements used in karate demonstrations.

-1 ( +1 / -2 )

Tourism is a very low paying sector.

That's true, but small and remote islands don't have all that many options. And Okinawa isn't even tropical, so it's hard to compete except for half the year. Manufacturing is out of the question, as the article described.

Really, it comes down to tourism, or banking and finance. Okinawa can't engage in the latter as long as it is a Japanese prefecture. Okinawa is a small but heavily populated island with few resources. There just aren't a lot of ways to build a super economy on that basis. Honolulu is no great place for an ambitious young person either, and they have the advantage of being the USA, filled with wealthy visitors, and great weather.

1 ( +1 / -0 )

At least the US bases help with the economy quite a bit! Idiots that want to get rid of them without realizing that their economy will go farther into the toilet if the Americans were to leave, not like there's plenty of precedent of that happening with places like the Philippines and Puerto Rico!

While many of the island's young women aspire to respectable jobs in the entertainment industry, visits to drinking establishments or sex businesses in mainland Japan will find many Okinawa natives so employed.

Not exactly something unique to Okinawa girls, plenty of dumb girls who think they just need to look pretty and they'll surely make it big in the entertainment world who come to the cities and allow themselves to get exploited like crazy because they're determined that they'll be the next national sensation.

-1 ( +2 / -3 )

Japanese developers on the mainland want to buy Okinawan land for expensive resorts and casinos. That is one reason they want the military gone. They want Okinawa to be like Hawaii, but Hawaii sucks for the locals because there are not many opportunities to become successful.

3 ( +3 / -0 )

The climate, environment, and culture of Okinawa would attract many if they could work remotely. Unfortunately only a tiny percentage of Japanese are free to do that.

2 ( +2 / -0 )

The tourist industry, at least hotels, restaurants and shops, are not known for paying well, and the way tourism works in Japan, it would be big hotel groups and package tour companies that would gain from any subsidy for tourism.

An Okinawa yen would not work either. If it were set at 50% of the yen, would a product sold for 1,000 yen on the mainland sell for 1,000 or 2,000 Okinawan yen? I could imagine Okinawans being paid 1,000 Okinawan yen an hour by Tokyo based companies, but that would not really help Okinawans.

3 ( +3 / -0 )

allowing it to eliminate all duties on foreign imports and the 8% (soon to be 10%) consumption tax

This is a great idea and should be tried right now -- there is no reason that Okinawa should be forced to take Tokyo's consumption tax rate from its less-well-off citizens.

In my home state in the USA, in addition to having its own sales tax rate, there is a lower rate (half the normal rate!) for economically depressed areas that the state wants to encourage business to move to so that they can develop. I'm sure "Buy Okinawan!" would be more attractive if there were only 4% added to the price instead of 8%.

0 ( +0 / -0 )

I can take or leave Okinawa. I did visit once but tend to go to Vietnam, Thailand etc etc for my resort holidays as I find them much more enjoyable and better value.

-1 ( +0 / -1 )

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