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Economy

Nearly 20% of Japan's quake recovery funds still sit idle

Six years on, communities struggle to start projects worth nearly $5bn

The tsunami cleanup effort gets underway in Natori, Miyagi Prefecture, in May 2011. (Photo by Akiyoshi Inoue)

TOKYO -- Almost $5 billion in funds earmarked for rebuilding Japan's disaster-stricken northeast remain unused, with projects entangled in local debates and nuts-and-bolts complications, a Nikkei study has found.

The Nikkei compiled government survey data and determined that -- six years after an earthquake and tsunami ripped through the region -- reconstruction projects worth 534.6 billion yen ($4.85 billion) have not started, in the absence of contracts for them. That equates to 19% of all allocations for rebuilding in three prefectures: Iwate, Miyagi and Fukushima.

What is the holdup? Part of the problem is the difficulty of building a consensus in affected communities. Other factors include a shortage of labor and the complex task of coordinating multiple construction projects that all need to move at once. 

The grant program -- the core of the government's support for devastated areas -- allocates funds to finance a variety of projects, including housing for displaced residents and land readjustments for local redevelopment. As of the end of March, 102 municipalities in Japan's northern regions had received funds through the program.

But the clock is ticking on the projects that remain in limbo. Under the terms of the program, they must be completed by fiscal 2020 -- the year through March 2021.

Chicken-or-egg problem

The Nikkei surveyed the progress of reconstruction in 72 municipalities across the three prefectures, using data collected by the Reconstruction Agency.

While a total of 2.78 trillion yen in grants were allocated in the six years through fiscal 2016, contracts signed with construction companies and other concerns cover projects valued at 2.25 trillion yen, or 81% of the total. Projects that would use up the remaining 534.6 billion yen remain uncontracted.

Shigeru Sugawara, the mayor of the hard-hit Miyagi city of Kesennuma, explained the complications like this: Say you need to bring in construction equipment to rebuild a bridge. First, you will need to build a road that is strong enough. But the road construction cannot proceed if there are plans to install underground piping and sewage systems in the same area.

"Coordination between projects is difficult," the mayor said.

The March 2011 disaster, which claimed nearly 20,000 lives, destroyed a staggering number of homes along with critical infrastructure.The central, prefectural and municipal governments that launched reconstruction projects at the same time are still struggling with "traffic control" issues.

For municipal governments like that of Kesennuma, the workload has soared.

The Kesennuma city office has a general-account budget of some 100 billion yen for fiscal 2017, up from around 30 billion yen before the disaster. At one point after the disaster, the budget hit 200 billion yen. The number of government workers, though, has remained almost unchanged. Each staff member is saddled with three to six times more work.

This also explains the project delays.

Then there is that matter of consensus-building: In Kamaishi, Iwate, city officials and citizens have formed councils to discuss the reconstruction of 21 urban districts. They have discussed everything from the design of houses for displaced residents to the locations of future parks, schools and garbage collection points.

Nailing down the details

Officials are wary of forging ahead without broad agreements on the details.

"There is a risk of money being wasted, because reconstruction work, if carried out without proper agreement among parties concerned, might need to be redone in the future," said Hisashi Konno, a senior official at the Kamaishi municipal government's reconstruction promotion headquarters.

But with the grant program drawing closer to expiry, the Kesennuma government is increasing the outsourcing of project designs and other work to private businesses, hoping to get things rolling.

Kamaishi, meanwhile, is holding monthly meetings with officials from the central and Iwate prefectural governments to coordinate reconstruction work.

In areas that avoided severe tsunami damage, at least, projects are nearing completion. This should free up more resources. Miyagi Gov. Yoshihiro Murai said, "We will accelerate reconstruction work by concentrating manpower, capital and goods on heavily damaged coastal areas."

(Nikkei)

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