NEWS ANALYSIS : Japan Elections Open Window for Reforms : Politics: There is now leverage to focus on system that benefited politicians, bureaucrats, entrenched businessmen.

Billions of dollars are wasted on public works projects awarded in rigged construction bids accompanied by political payoffs. Politicians help keep discount chains out of their districts to protect local shops. Bureaucrats maintain elaborate regulations and quasi-public companies to assure themselves employment when they retire.

Such policies have been an accepted part of Japan’s ruling triad of business, bureaucracy and Liberal Democratic Party. But these policies don’t necessarily benefit all Japanese businesses. There is a growing constituency, forced to accept inefficiency and corruption as a price for stability, that now favors reform .

The emergence in elections Sunday of a new conservative opposition may, over time, provide a safe alternative for Japan’s more progressive business sectors.

“In the past, business was held hostage to the system because their only alternative was the socialists or the communists,” said Kent Calder, a Princeton University political scientist who came to Japan to observe the elections. “Now business has a broader range of options. There is pressure in the business world for reform, and now they have more leverage.”

Already Japan’s business organizations have ended their policy of contributing exclusively to the ruling LDP and are encouraging member companies to make donations to parties of their choice.

“The ancien regime is over,” said Masao Miyoshi, managing director at Keidanren, Japan’s big business organization. “We welcome the emergence of a conservative opposition.”

Progressive businessmen such as Sony Chairman Akio Morita have long been promoting administrative reform to curtail the powers of the bureaucracy. The Social and Economic Congress of Japan, an association of reform-minded businessmen, worked last year with opposition parties on political reform proposals.

If successful, deregulation could boost Japan’s economic efficiency, lower consumer prices by improving distribution and generally cut the cost of doing business in Japan.

But analysts admit it could take years before the conservative opposition has the power to push reforms through the powerful bureaucracy. Meanwhile, Japan is liable to go through a period of coalition government that could create the kind of uncertainty that is anathema to business.

“Consumer demand will not begin to grow until the political situation and the economy stabilize and people are more confident about the future,” Yoshiaki Sakakura, president of luxury department store chain Mitsukoshi, told the Nihon Keizai Shimbun, Japan’s business daily.

Although the stock market has not taken a heavy fall, analysts say it is only because investors are waiting to see what new government emerges. “The situation is now like a company in confusion without its president,” said Yasuo Ueki, general manager of equities at Nikko Securities Co. The value of the yen has also fallen modestly over concern about Japan’s future stability.