Lobby group urges tax breaks for Japan quake zone

illustration photo

>> Japan scrambles as reactor container 'damaged'

>> Blasts, new fire escalate Japan's nuclear crisis

>> Mounting Japan crisis sparks exodus of foreigners

Parts of the northeast were left devastated by the 9.0-magnitude earthquake, the worst ever recorded in Japan, and tsunami, while fears over radiation leaks from a nuclear plant have damaged the farming and fishing industries.

The chairman of Nippon Keidanren, an influential lobby group, said Japan should exempt residents from income and property taxes for three years to encourage reconstruction and help the local economy get back on its feet.

Hiromasa Yonekura told Kyodo news agency rapid reconstruction was crucial if key industries such as the manufacture of automobile parts were to maintain their global dominance.

He cited the huge damage done to the economy of Kobe, a Japanese port city, after a major earthquake in 1995.

Local authorities asked for Kobe to be designated a special economic zone after the disaster, but were turned down and the city's slow recovery allowed Busan in South Korea to overtake it as a trading port.

Japan's biggest companies are still trying to gauge the full impact of the March 11 disasters, which have left nearly 28,000 dead or missing.

The damage crippled supply chains and led to power outages that have forced the likes of Toyota, Honda and Sony to shut plants.

Output overseas has also been compromised, with a shortage of key components sending shockwaves through global markets.

On Friday, a leading research institute forecast that the disaster would eliminate 81,500 jobs in the three hardest-hit prefectures over the next six years.

Employment at businesses in the coastal areas of Miyagi, Iwate and Fukushima prefectures will fall to 691,800 workers from the pre-disaster figure of 773,300, according to the Nomura Research Institute.

The study found jobs in the manufacturing, wholesale and retail industries would be worst affected, but it did not take into account the impact on the fishing and farming sectors, meaning the final figure could be much higher.

Prime Minister Naoto Kan is to set up a special task force for reconstruction following the disaster, the cost of which is estimated at 16-25 trillion yen ($190-300 billion) over the next three fiscal years.

Many see Japan sliding into recession as a result of the impact of the disasters. The central bank's Tankan survey on Monday showed Japanese business confidence in the outlook for the next three months had plunged.