TOKYO Katsunobu Kato, Japan's former health minister and a candidate running in the ruling party leadership race, on Tuesday called for compiling a stimulus package to fund spending to boost domestic investment and revitalise regional economies.

In announcing his intention to run in the race to replace incumbent Prime Minister Fumio Kishida, Kato said Japan must double households' income by promoting wage hikes to ensure the economy achieves a consumption-driven recovery.

"Japan is on the cusp of emerging from deflation. We shouldn't stop this drive and instead accelerate it" with a focus on boosting wages and capital expenditure, Kato said in a news conference announcing his intention to run in the Liberal Democratic Party's (LDP) leadership race on Sept 27.

The winner of the LDP's leadership race, scheduled on Sept 27, will become the nation's next prime minister due to the party's control of parliament.

In his campaign pledge, Kato said he would aim to re-direct companies' ample reserves towards capital expenditure and wages.

"Strong consumption would create competition, which would heighten companies' ability to earn profits. That, in turn, will lead to further wage hikes," he said, an approach similar to that of incumbent premier Fumio Kishida's policies.

While Kato trails behind other candidates as the public's favourite to become next prime minister, the former finance ministry bureaucrat's experience serving key cabinet posts make him a candidate to become next finance minister, analysts say.

  - Reuters