Stable Yet Unpredictable: Upcoming Elections in Japan and Their Implications for Businesses 

Although Japan—one of the largest economies in the world caught in the “lost decades”—is among many countries around the world with critical elections this year, the real and potential implications of the country’s upcoming elections have largely gone under the radar.  

In some ways, it is understandable that Japan’s elections would go overlooked within these conversations. From a historical perspective, Japan is quite “stable.” The Liberal Democratic Party (LDP) has dominated Japanese politics for most of the past six decades. From a party-politics perspective, the LDP still maintains around 30% support in the latest generic ballot polls, even amidst a steady stream of scandals over the past two years. Still, these scandals—and a general LDP fatigue—are stirring intra-party intrigue and potential implications for businesses in Japan. In this context, there are at least three critical electoral moments that we will be monitoring during the next six to 18 months.* 

Upcoming Elections:

Tokyo gubernatorial election (July 2024). Will the two-term Tokyo Governor Yuriko Koike run for a third term?

As Yuriko Koike, a former LDP Diet member and now independent governor of Tokyo, approaches the end of her second term, we observe a marked increase in long-standing speculation about her rejoining national politics and seeking prime ministership. Among those tempted by Koike’s re-entry to national politics, there is also speculation about her path: will she go back to her familiar LDP or will she work with other parties and become leader of a coordinated opposition? Answers to each of these scenarios will likely impact plans for every major party.

LDP’s presidential election (Sep 2024). Can Kishida retain his leadership? If not, who will replace him? Could a woman become Japan’s next prime minister?

As Koike and her would-be allies calculate, a key consideration is whether the current LDP president, Prime Minister Fumio Kishida, can sustain his leadership of the ruling party or whether a new political structure will emerge. Over the last two years, the LDP has faced a series of scandals. The most recent one involving investigations of fundraising corruption and tax evasion—has precipitated “reform measures” that included the temporary end of some LDP’s major “factions” (factions are sub-party groups typically organized around a specific ideology, agenda and/or leading figure; they often maximize their influence through LDP decision making processes). The dissolution of these powerful groups creates a void in which Kishida could try to reconsolidate his power, but it also creates openings for other challengers, including some popular female politicians, including Yoko Kamikawa, the current foreign minister, and Sanae Takaichi, former minister of internal affairs who ran for the LDP presidency in 2021. We must not forget the role of Koike who could also potentially become a factor in the election. Who will lead the LDP after this election? Will a new party structure be formed to replace the factional order? Will the first-ever female leader of the LDP and Japan emerge? What will that mean to Japanese politics? All of these questions need to be further observed.

Diet general elections (no later than October 2025). When and under what circumstances will the LDP call for a national election?

The terms of office for Japan’s dual body Diet system—the entire House of Representatives (Lower House) and one-half of the posts in the House of Councillors (Upper House)—are due to expire in October and July 2025, respectively, but as in other parliamentary systems throughout the world, the prime minister may dissolve the Lower House and bring forward the general election at a date that he deems favorable to him and/or his party (technically, the minority party can also call for a “no confidence” vote, which would produce the same result if successful). The Koike considerations and intra-party politics noted above complicate any predictions about when things might proceed or what outcomes they might produce. 

And that’s all the more we recommend business leaders hold space.

What Could That Mean for your Business? 

Going back to the title of this piece, Japan is stable in a sense, but the unpredictable progress and results of political events in the coming months could re-shape the context, priorities and opportunities for anyone doing business in or with Japan. As of now, most observers expect the LDP to retain power for the near term. While we recommend staying the course in terms of its alignment to LDP policy agenda, businesses should monitor closely the changes in intra-party politics and anticipate potential shifts to that agenda, likely towards social goals and policies—DE&I, gender/LGBTQ+ equality, national security and the role of business in society—that may align more or less to their mission and values.  

*This article was composed in mid-April 2024 and only reflects the political developments until this point.