The BGA Japan Team, led by Managing Director Kiyoaki Aburaki, wrote an update to clients on Prime Minister Fumio Kishida’s announcement that he will not seek reelection.

Context

  • Japanese Prime Minister Fumio Kishida announced on August 14 that he would not seek reelection in the upcoming leadership contest of the ruling Liberal Democratic Party (LDP), scheduled for September. As a result, a new LDP leader will be chosen within a month and is expected to assume the role of prime minister by late September. The new leader is expected to quickly dissolve the House of Representatives, potentially leading to a general election by late October or early November.
  • For the LDP, it is essential that the leadership election capture strong public interest. To restore public trust, which has been eroded by political funding scandals over the past year, it is crucial for the candidates to engage in a competitive, reform-focused race that raises public expectations. This approach is the most effective way to rebuild support for the LDP. If the new prime minister can capitalize on this momentum and swiftly dissolve the Diet after taking office, the LDP’s chances of winning the general election will be significantly enhanced.

Significance

  • The next LDP president and prime minister must clearly articulate their policies to garner public support. These include how Japan will seize the opportunities presented by the generative artificial intelligence (AI) revolution to revitalize its economy, address the issue of population decline with innovative solutions, accelerate the globalization of Japan and its people and contribute to the stability and prosperity of the international community. Without a clear vision for these challenges, public support for the new leadership will not last. Some within the LDP are concerned that if the president is elected through internal party maneuvering, the party risks losing public trust. At the same time, however, former members of dissolved factions are regrouping to discuss strategies for the leadership election. The outcome of this election, which involves the votes of 372 Diet members and about 1.1 million general party members, will be a significant indicator ahead of the general election.
  • Fortunately for the LDP, several candidates for the next prime minister and president are expected to demonstrate strong convictions. These include former LDP Secretary-General and Defense Minister Shigeru Ishiba, Digital Minister Taro Kono, Economic Security Minister Sanae Takaichi and current LDP Secretary-General Toshimitsu Motegi. Former Economic Security Minister Takayuki Kobayashi, in his 40s, is also likely to make candid statements, leveraging his youth. Although their policies will inevitably build on the foundation laid by the Kishida administration, the degree of public support the next administration garners will largely depend on the originality and prioritization of its policies — namely, the clarity and strength of its convictions.

Implications

  • Kishida’s decision to step down does not signal a major shift in the current government’s key policies. Initiatives like AI deployment and semiconductor strategies already enjoy broad support within the LDP, as do policies promoting women’s participation. The new leader will likely accelerate these initiatives in an effort to deliver tangible results. The business community should recognize that with the potential emergence of a pro-reform administration, actively engaging with Japan’s leadership will be more important than ever.
  • Another political party leadership election will take place September 23: the race for the leader of the largest opposition party, the Constitutional Democratic Party of Japan. The new leader’s main challenge will be uniting the opposition forces to obtain more seats in the upcoming general election. The election of former Prime Minister Yoshihiko Noda — who commands support even among conservative circles — could present a challenge for the LDP.

We will continue to keep you updated on developments in Japan as they occur. If you have any comments or questions, please contact BGA Japan Managing Director Kiyoaki Aburaki at kaburaki@bowergroupasia.com.

Best regards, BGA Japan Team

A small ginko leaf

Managing Director

Kiyo understands the Japanese business community inside and out from his three decades working for Japan’s most powerful business organization, Keidanren. He covers international trade and investment, defense and aerospace, information technology, entrepreneurship, deregulation and data privacy policy. He also played a leading role in developing and implementing political strategies for the private sector. Kiyo has led Keidanren’s strategic international initiatives since 2013, and most recently headed up the federation’s international engagement. He worked closely with former Prime Minister Yasuo Fukuda to establish Japan’s Track 1.5 dialogues with the United States and China. The dialogues produced important results by strengthening ... Read More