Jun 13 (nytimes.com) - Hidden beneath its streets, Japan's aging sewer pipes spotlight a challenge that has held back reforms Prime Minister Shinzo Abe is pushing to revitalise the world's third-biggest economy.
Overhauling the country's infrastructure - roads, tunnels, ports and sewage plants, many of them built after 1970s when the construction boom started - is a looming burden on the government, whose deficit has already swollen to more than twice its GDP.
Abe's solution is to sell public assets to companies or allow firms to manage them, which he argues would also help reduce the bulging deficit and generate economic momentum and jobs.
Success here would be a boon to stalled structural reforms, which along with monetary and fiscal stimulus, make up his three-pronged approach, or the so-called "three arrows", to reenergize long-moribund activity.
So far, Japan has sold the right to operate Kansai International Airport, serving Osaka, and Sendai International Airport in northern Japan. Cashing in on a tourism boom, the government is planning to privatise more regional airports.
Now authorities aim to open markets for the water systems to private investors. But the plans are not getting much traction. Cities don't trust businesses to take over something as vital as water supplies.
Nara, Japan's ancient capital, last year rejected a proposal to let a business operate its water works jointly with the city.
"What we are afraid of the most, if the service is privatised, is that the new entity may stop proper water supply in some areas to seek efficiencies," said Kentaro Shirakawa, a member of Nara's city assembly.
So far, only Hamamatsu, a town in south central Japan, has picked a group of companies led by France's Veolia as a winning bidder to operate its sewage system - but not the hard part, overhauling the pipes.
