The government grossly overestimated demand and unnecessarily invested large sums in designated resort areas in 41 prefectures based on a law to promote and develop resort-related industries, according to a draft report by a study group of the Land, Infrastructure and Transport Ministry.

A copy of the report, obtained by Kyodo News, says without providing actual figures that the total number of visitors using the designated resort areas was 43.4 percent of the ministry's initial estimates.

The number of new jobs created in connection with the program was only 21 percent of the forecast, according to the report.

It says a mere 24 percent of the designated facilities, including ski resorts, were completed, because the demand estimate was overly optimistic and was made in the 1980s, when there was high economic growth and the sky seemed the limit.

"The excessive investment based on an incorrect assessment of demand is problematic," the report says, without citing how much was invested.

However, it concludes that the program fulfilled some of its aims to help improve regional economies and quality of life.

As a result the ministry has no intention of trying to get the resort law repealed.

The ministry will prepare a final report by the end of March and revise the basic principles of the law, ministry sources said. It will also demand that prefectural governments change or halt their resort plans if they look to be unprofitable.

The final report will be the first of its kind on the resort law, which took effect in 1987 in a bid to revitalize regional economies and quality of life by promising preferential tax treatment to resort areas specially designated by the government.

The resort law has often been criticized for promoting destruction of the environment and setting up unnecessarily large joint public-private ventures.