THE CRISIS HITS HOME IN HOKKAIDO For a look at how badly the Japanese crisis can affect the lives of ordinary citizens, just head for Sapporo, the capital of Hokkaido, Japan's northernmost island. The failure of Hokkaido Takushoku Bank Ltd., the dominant local bank, has dealt a devastating blow to the island's already fragile economy. And its citizens now worry that public works projects in their prefecture may soon dry up, as the central government in Tokyo runs out of funds. The squeeze already is bad. According to Teikoku Data Bank, a Tokyo-based credit research organization, 974 Hokkaido companies folded in the past fiscal year ending in March, up 25.7% from the 1997. "Hokkaido's current crisis is the severest one in its history," says Yasuyuki Yanagisawa, manager of Teikoku Data Bank's Sapporo branch. "And one sees no sign of a rebound." The failure of Hokkaido Takushoku has eliminated readily available loans from the island's economy. Analysts and local businesses still are talking about the bank's reckless lending, which channeled a river of cash into such fancy development projects as golf links, hotels, and theme parks. Akira Nakano, president of Cowboy Co., Hokkaido's largest discount store chain, remembers when the bank offered his company 90 billion yen in loans to use any way it liked--even though annual Cowboy profits are only 200 million yen or so. "I declined because there was no way we could use that much," says Nakano. THIRD WORLD..With Hokkaido Takushoku gone, locals are more dependent than ever on public works. Some 10% of the central government's public works spending has gone to Hokkaido, a region that accounts for only 4% of gross domestic product. "Hokkaido's economy is clearly like a developing country's," says Hisashi Inoue, professor of economics at Hokkaido University. This vast cash injection offsets much of the 2.5 trillion yen "trade deficit" Hokkaido holds with the rest of Japan. Hokkaido relies on such primary industries as agriculture, forestry, fishery, and light manufacturing. Heavy hitters, such as Honda Motor Co. or Fujitsu Ltd., are largely missing. What Hokkaido ultimately needs, analysts say, is a way to wean itself off government assistance. Toshiaki Yamada, 36, a dairy farmer in Tokachi, a southeastern region of the island, is keenly aware of the problem. He says local farmers, especially those of his father's generation, are accustomed to rich handouts. Yamada's operation, from office fax machine to automatic milker, is financed lavishly by the government and agricultural cooperatives. "These things won't be availaible in the future," says Yamada. But local leaders have yet to map out a clear course for recovery. "There is not even a prescription for what to do to improve things," says Inoue of Hokkaido University. Sounds a little like Japan. By Miki Tanikawa in Sapporo RELATED ITEMS MAIN STORY: JAPAN'S REAL CRISIS COVER IMAGE: Japan's Real Crisis TABLE: Japan's Debt Trap TABLE: What Needs To Be Done COMMENTARY: WHY AMERICA WON'T BE NEXT CHART: One Bubble or Two? COMMENTARY: WHY JAPAN WON'T ACT TO SAVE ITSELF ONLINE ORIGINAL: THE CRISIS HITS HOME IN HOKKAIDO ONLINE ORIGINAL: CLYDE PRESTOWITZ: VIEWS FROM AN OLD JAPAN TRADE HAWK ONLINE ORIGINAL: INVEST IN JAPAN? IT'S NOT OUT OF THE QUESTION Return to main story

Updated May 7, 1998 by bwwebmaster
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