Ready or not, Okinawa aims to wean itself off of military dollars

Shoppers stroll through American Village, a plot of former U.S. Army land that has been redeveloped into an entertainment and shopping complex that attracts about 1 million visitors each year. Okinawa is hoping to have similar redevelopment success as other military properties are returned following a realignment of U.S. forces that will close Marine Corps bases south of Kadena Air Base.



CAMP FOSTER, Okinawa — Yoichi Iha unfolded a colored city map on the desk in his office, which sits just outside the fence line of the Futenma air station.

The former mayor of Ginowan knows well what the map shows — the sprawling oval military base at the center, surrounded by a doughnut of city land.

About 10 percent of Japan’s southernmost prefecture is occupied by U.S. military bases including Futenma, a fact of life that has caused deep frustration on the island and political turmoil in Tokyo.

For years, Iha and others have envisioned a future when the military land is returned and transformed into malls, restaurants, shops and office buildings that will draw new prosperity and tourists from abroad.

The return of military land could happen if the U.S. and Japan follow through on plans to move about one third of the servicemembers stationed here to Guam and close a handful of large bases in the coming years.

The transformation, prosperity and tourists to follow? Not as certain.

While Iha sees it all clearly — “Okinawa’s future is with Asia,” he says — experts say the small, relatively poor island’s economic fortunes might be much more complicated.

Over the years, the Okinawa government, businesses and workers have developed a deep dependence on military-related spending, according to data supplied by U.S. Forces Japan and the Japanese government. Money from the military and the government in Tokyo is one of the biggest industries here next to tourism, and makes up 5 percent to 7 percent of the entire local economy.

Despite Okinawa’s hopes to rid itself of the U.S. military, it remains uncertain whether redevelopment could fill the billion-dollar hole that would be left behind.

“The presence of vast military bases hinders Okinawa’s ability to further grow its economy,” Okinawa Vice Gov. Kanetoshi Yoseda said. “Even if closing bases causes a temporary loss of income, people believe that far bigger chances at growth will be in their hands” when the military is gone.

Yoseda, Iha and others who champion redevelopment can look to successes.

The American Village in Chatan was once U.S. Army land but is now a sprawling seaside commercial district of restaurants, coffee shops and clothing stores that draws about 1 million visitors each year and employs about 3,000 people.

A 2007 study by a private Japanese institute found that American Village produced about 215 times more benefit to the local economy than the Army operations that existed there before.

Similarly, the Omoromachi center in the prefecture capital of Naha was once U.S. military housing, but was redeveloped into a mall, offices and government facilities and produces about 16 times more economic benefit to the island, according to the report published by Nomura Research Institute in Tokyo and Urban Science Associates in Naha.

“What we will gain is far greater than what we lose from base closure,” Yoseda said.

No matter what the future holds, Okinawa has a long way to go before kicking free of its dependence on the military. About $1.5 billion is pumped into the island economy each year by Tokyo to cover rent on Japanese-owned land where U.S. bases are located, salaries for thousands of base workers and military construction work, according to a 2008 USFJ economic impact report.

An additional $475 million comes from spending by the military and servicemembers, including off-base housing rent, worker salaries at base exchanges and more than $1.6 million in personal telephone calls.

The military spending contributes about three times more to the economy than the island’s fishing, agriculture and forestry industries combined, the USFJ report shows.

“It is an illusion to think that closure and return of military bases will automatically promise Okinawa’s economic development,” said Moritake Tomikawa, an economic expert and president of Okinawa International University.

The U.S. and Japan plan to close bases south of Kadena Air Base and move Marines to Guam in the coming years will likely carve a billion-dollar hole in the Okinawa economy and eliminate about 10,000 jobs on the island, Tomikawa said.

“If the change happens all at once, the economic impact is grave,” he said.

A departure by the military is also likely to rock local businesses. Hitoshi Onaga opened the Sanki Garage custom sports-car shop in May between Camp Foster and Camp Lester, an area where U.S. personnel spend about $17 million each year on personal vehicle purchases, according to USFJ data.

“I opened the shop because I love sports cars,” Onaga said. “I picked the place because it is located ideally along Highway 58 and in the [central area] where many Americans are.”

Onaga sells his customized Nissan Skylines and GTRs — highly popular models among servicemembers on the island — for $3,700 to $75,000.

His future will depend on the Americans who now make up about 30 percent of his clientele — a number he hopes to grow, he said. If the military leaves, Onaga said, “I guess I would have to think of something else to do to survive.”

Property manager and developer Seijun Tokuzato has watched new homes marketed toward American tenants spring up across central Okinawa over the past 15 years. His development company just completed Orchid Valley, a 25-home community near Camp Foster designed for U.S. servicemembers.

There are about 30 housing agencies on Okinawa with about 5,000 properties being marketed to the military population, according to the All Okinawa Housing Association.

“For many people here, investing in homes to rent to Americans is considered safer than buying stocks or an investment fund,” Tokuzato said.

“Many people are benefiting from [the military] and it is something indispensable, at least in today’s Okinawa.”

Yoseda, the vice governor, has had to balance his administration’s efforts to kick the Futenma air station off the island with the economic realities.

In July, he met with the 18th Air Wing command at Kadena Air Base to ask that more military contracts be let on the island.

Okinawa companies have made nearly $23 million doing housing construction on Kadena over the past decade.

But the figure is only a small percentage of the $556 million paid out by the base to Japanese companies for such work over that period, according to Okinawa General Contractors Association.

“Because Okinawa hosts a large military presence, shouldering various burdens, I believe due consideration ought to be given to local builders,” Yoseda said.

In the fervor to become independent from the military, Okinawa might have overestimated its economic potential, said Robert Eldridge, deputy assistant chief of staff for the G-5 Planning and Liaison Office of Marine Corps Bases, Japan.

Each new American Village-style complex built on the island will likely have diminishing economic returns because businesses will be competing for a limited number of customers, he said.

Meanwhile, the deep relationship with the military remains and the island should try to take advantage of it, Eldridge said.

“Let’s have a dialogue about mutually beneficial things,” he said.


The former Awase golf course in central Okinawa was a military recreation spot for U.S. servicemembers until it was returned to the island last year. Now, plans call for it to be redeveloped into a mall, hospital, hotel and residental area. Okinawa hopes the site will be as successful as two other major commercial complexes built on the site of former military land.

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