Japan ruling party's junior ally Komeito to end coalition

Japan's Komeito said Friday that the political party plans to terminate its coalition with the ruling Liberal Democratic Party (LDP) and will not vote for new LDP chief Sanae Takaichi as prime minister, citing differences over their response to political funding issues, local media reported.

Komeito leader Tetsuo Saito told Takaichi in a meeting on Friday afternoon that his party would leave the coalition government, ending a partnership between the two parties that has lasted for more than 25 years, public broadcaster NHK reported.

Saito and Takaichi discussed their coalition framework based on three issues, views on history, including visits to the war-linked Yasukuni Shrine in Tokyo, Komeito's concerns over potentially exclusionary policies toward foreigners, and political funding reforms, according to Kyodo News.

But the two leaders could not agree on the third issue, with Komeito demanding more efforts to get to the bottom of the funds scandal and tighter controls of political donations by businesses and organizations, Kyodo News reported.

Saito said at a news conference that efforts to tackle politics and money are Komeito's top priorities and that the LDP failed to provide sufficient answers regarding political funding issues.

Komeito had urged the LDP to adopt its proposal for stricter restrictions on political donations by businesses, including a cap of 20 million yen (about $130,862) per year to any single party, aimed at limiting corporate influence on policymaking. Currently, no such cap exists under Japanese law.

The LDP, by far the top beneficiary of corporate donations, is seeking to avoid restrictions on such donations to individual lawmakers.

"We cannot write the name of Sanae Takaichi in a vote for a new prime minister," Saito added that Komeito will not vote for her in the upcoming parliamentary session to choose the country's new leader.

For Takaichi to become Japan's first female prime minister, she must be appointed by the Diet, Japan's parliament. Komeito's departure means the LDP will now need to seek support from opposition parties to secure her election.

The smaller Komeito first entered a coalition government with the LDP from 1999 to 2009. The two parties later regained power together in 2012 and have held it since.

Komeito's departure is reported by Reuters as a potential trigger for an unwinding of the so-called "Takaichi trade," which had been driven by investor optimism around fiscal stimulus.

(With input from agencies)