Public Policy Planning & Consulting Co. (SEISAKU-KOUBOU) is a public policy consulting firm based in Tokyo, covering broad policy areas such as economic policy, fiscal policy, regulatory policy, administrative reform, international trade and investment, etc.
PPPC provides consulting and briefing services to the clients in the central/local governments, Diet, local assemblies and the private sector.

This blog is aimed at providing general information, latest updates and some of our analytical reports about Japan's public policy in English.
The contents include;
- updates on some important government councils, especially those in which our executive officers serve as the members,
- weekly reports on latest news in Nagata-cho, the political center in Japan, (partially).
- analytical reports and articles by our members and distinguished experts outside the firm,(partially).


This Week’s “Nagata-cho” (17-24.Sep, 2013)

 Prime Minister Shinzo Abe and Finance Minister and Deputy Prime
Minister Taro Aso had a meeting on September 18 to discuss the 5
trillion yen of economic stimulus to relieve potential negative
economic impacts of the consumption tax hike to 8% scheduled in April
2014. Abe seemed to have requested to entail a large corporate tax
reduction, while Aso, eyeing keeping balance of the countrys finance,
is in favor of compiling a supplementary budget to simply aid
low-income brochures and to add public works projects.
 Likewise, there are different views on the budget and economic policy
within the Abe Cabinet. While Abe, Chief Cabinet Secretary Suga and
the economic and fiscal policy minister Amari are rather positive on a
corporate tax reduction with an eye to accelerate the nascent economic
circulation, Aso, leading the Ministry of Finance, and many members of
the ruling Liberal Democratic Partys tax panel take the cautious

 Abe met Aso and Amari again on September 20 and agreed on the
framework of the 5 trillion yen of economic stimulus. It entailed (1)
expansion of corporate tax reduction and investment money to the
corporations which raised wages, (2) abolishment of the exceptional
corporate tax rate for reconstruction one year in advance of the
legislation, (3) maintaining the 35 trillion yen of reconstruction
fund until 2015, and to (4) entail measures in the economic stimulus
to make sure that the reduced tax would be reflected into wage
increases. While Aso suggested implementing the tax reduction from FY
2015, Abe didnt accept the suggestion and postponed it to a next
meeting scheduled on September 30. Further, the economic stimulus will
likely entail other corporate tax reductions and deductions as well as
additional public works projects concerning the countrys roads,
tunnels, bridges, etc. Yet, there are persistent, cautious voices
toward the corporate tax reduction not only from the LDP itself but
its coalition partner New Komeito, so the LDPs tax panel postponed
reaching a conclusion to its next meeting scheduled on September 27.

 Abe officially decided to reappoint all the LDP executive officers
whose terms are expiring this month and all the Cabinet ministers in a
meeting on September 17. Still, considering feelings of the partys
young and middle-class lawmakers and their guardian faction leaders,
Abe will likely reshuffle the vice-ministers and parliamentary
secretaries on September 30.

 Abe Cabinet plans to submit bills to reform the civil service system
to realize a politically-initiated government in the next Diet session.
The bills include the ideas such as an establishment of Cabinet
Personnel Bureau to control nominations of about 600 high-class
officials, personnel evaluation and examination, training programs,
etc., or an increase of the advisory positions to Prime Minister from
the current 5 to 10. But since there are internal oppositions from
both the existing government ministries such as the National Personnel
Authority and LDP, underground negotiations and bargaining from
various grounds will likely continue for a little while.



Reform Menu in National Strategic Special Zones

* Written by Eiji HARA, PPPC President

 The government is nearing the final stage of discussions on the
deregulatory reforms to be undertaken in the National Strategic
Special Zones toward the autumn Diet session. To submit a bill in the
next extraordinary session, the government needs to finalize the idea
within this week to start drafting the bill.
 In a meeting of the Industrial Competitiveness Council on September
20, Tatsuo Hatta, chairman of the Working Group on the National
Strategic Special Zones, and Heizo Takenaka, member of the Council,
proposed the following 15 items as challenges which must be tackled

1.Urban Planning
Relaxation of the floor-area-ratio restriction
Improvement of are management
Admission of using residential apartments for accommodations

2.Medical Care
Acceptance of foreign doctors and nurses in medical centers
Relaxation of the bed-number regulation
Admission of using the drugs and medical devices accepted in foreign
New medical schools tied-up with medical centers

Exceptional measures to start-up companies and foreign companies
  regarding the dismissal rule, fixed-term employment rule, white
  collar exemptions.

Admission of public schools to be managed by private organizations

Reallocation of authority among mayors and agricultural affairs
Application of credit loans to small- and middle-sized corporations
  to farmers
Reconsideration of conditions to be qualified as agricultural
  product corporations
Admission of managing restaurants in farmlands

6.Local Assembly
Lowering the minimum age to run for local assembly elections

Admission of using historical houses for accommodations

 It is critically important how much breakthroughs can be made toward
the bedrock regulations as start-up menu in starting the new
Special Zones. A member of the Industrial Competitiveness Council in
the meeting on September 20 insisted that all the15 items should be
 How much result can be obtained? The answer depends on the efforts
within a few days.


Outline of the paper submitted by Prof. Heizo Takenaka at the Industrial Competitiveness Council on September 20

National Strategic Special Zones should be “showcases for regulatory reform.”

Two types of Special Zones should be created for that purpose.
1.  “Global Business Cities,” which can attract excellent companies and human resources from all over the world,
2.  Models of local areas to grow autonomy, instead of depending on subsidies from the central government.

Shortlist of regulatory reform proposals (15 proposals) to be undertaken immediately

<Proposals for the Type 1>
1) Infrastructure / interchange of people
 - Transportation:  airports
 - City planning :  relaxing the floor-area-ratio restriction,  improving area management
 - Tourism:  allowing to use residential apartments for accommodations

2) Industries
 - Labor:  special rules for start-up companies and foreign companies
        (dismissal rule, fixed-term employment rule, white collar exemption)
 - Financial market

3) Living environment
 - Medical care:  removing the bed-number regulations,
             lifting the ban on establishing new medical schools,
             accepting foreign doctors,
             allowing the use of foreign-approved drugs and medical supplies
 - Schools:  allowing public schools to be operated by private organizations

<Proposals for the Type 2>
1) Infrastructure / interchange of people
 - Transportation:
 - Member:  lowering the minimum age to run for elections
 - Tourism: allowing to use historical buildings for accommodations

2) Industries
 - Agriculture:   allowing corporate ownership of farmland,
             removing regulations for bank loans,
             transferring the power of agricultural affairs committees to mayors,
             relaxing regulations on the use of farmland

3) Living environment
 - Medical care (remote diagnosis and treatment)
 - Schools (remote learning)

Hearings on Proposals of the National Strategic Special Zones (Sep 16-17)

The government of Japan on September 11 stopped accepting the first round of proposals from private companies or local governments for the National Strategic Special Zones in which deregulatory measures are to be taken in certain designated areas. There were totally 197 proposals from 181 private entities and 61 local governments (*the numerical mismatch is due to the joint-proposals by overlapping proposers).

The government’s Working Group on the National Strategic Special Zones has held hearings from the following 26 proposers on Sep 16-17 as continuance from the last week.

Japanese only

September 16
●Mori Trust Holdings Inc.
●Tokyu Corporation
●Nippon Television City Corp., Nikken Sekkei Ltd.
●Fuji Television Network, Inc., Mitsui Fudosan Co. Ltd., Kajima Corp., The Nippon Foundation
●Niigata Prefecture, Niigata City, Joetsu City, Seiro Town
●Ishinomaki City
●Tottori Prefecture
●Shizuoka Prefecture
●Fukushima Prefecture, Fukushima Medical Devices Industry Unit, Fukushima Seminars on Medical and Healthcare Devices
●Ishikawa Prefecture
●Japan Airport Terminal Co. Ltd.
●Sun-Based Economy Association
●Rakuten Inc.
●Eikoh Inc.
●ORIX Corp., ORIX Real Estate Corp.
●Kyoto Prefecture, Kyoto City, Kyoto University, Kyoto San-Gaku-Kou Renkei Kikou, Kyoto Sangyouikusei Consortium
●Intellectual Property Strategy Network Inc.
●BlackRock Japan Co. Ltd.
●GREE Inc.
●The National Art Center, Tokyo, Suntory Museum of Art, Mori Art Museum

September 17
●Kanagawa Prefecture, Yokohama City, Kawasaki City
●Tokyo Metropolitan Government
●Osaka Prefecture, Osaka City
●European Business Council in Japan
●Hokkaido Prefecture
●Fukuoka Prefecture

There were many propositions from the private corporations and the local governments in various industrial/technological/research fields including the finance, top medical and pharmaceutical practices, technology, logistics, environment/energy, etc., as well as propositions of strategic industrial concentration and accumulation regarding the urban foundation and infrastructure. Examples of such propositions include a safe and secure urban planning and social infrastructure and 24 hour-operation of Haneda Tokyo International Airport.

The government plans to continue hearings from the proposers and to process the first round of nomination as the National Strategic Special Zones in mid-October.

(Yoshiyuki KUROSAWA, PPPC Chief Researcher)


Financial Sources for Economic Stimulus

* Written by Yoichi TAKAHASHI, PPPC Chairman / Kaetsu University Professor

 Seemingly the Cabinet will draft an economic stimulus for a concern
that the scheduled tax hike will have negative impacts on the nascent
economic recovery. While its scale is said to be some 5 trillion yen,
the Finance Minister Taro Aso said on September 13 that it would be
unnecessary to issue additional government bonds to raise the
necessary funds.
 It is already absurd enough to compile a supplementary budget in
order to prevent the scheduled-tax-hike originally aimed at
reconstructing the finance from actually hitting the economic
condition. Further, it would be just ridiculous to issue the
government bonds to squeeze the money for that supplementary budget.
The Ministry of Finance seems to be busy avoiding such public

 Then, let’s consider possible financial sources for the
supplementary budget.

・The remainder of the initial budget FY 2012 in the general account =
  1.2952 trillion yen


This continuance by PPPC Briefing Service

 PPPC’s weekly updates and articles are fully accessible to the
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This Week’s “Nagata-cho” (10-17.Sep, 2013)

 The Ministry of Finance and Cabinet Office on September 11 released
their prediction of the economic sentiment for the July-September
quarter, marking +12 for the serial three quarters as of August 15.
Also, the fiscal and economic policy minister Akira Amari reported on
September 13 that the economic condition is in the recovering phase to
the Cabinet meeting. Toward Prime Minister Shinzo Abes judgment
whether to raise the consumption tax rate from April 2014, the
economic indicators suggest that the economy has picked up as the
supplementary provision of the legislation premised as conditions for
the tax-hike. Accordingly, the lawmakers in the ruling Liberal
Democratic Party have increasingly voiced accepting the scheduled-tax
hike to 8% from the next year.

 Abe told Finance Minister Taro Aso and Amari to compile the economic
stimulus and supplementary budget including the second growth strategy
by the end of this month on September 10, and Tsuyoshi Noda, Chairman
of LDPs Research Council on the Taxation System, to take
countermeasures to avoid negative impacts of the tax-hike to the
economy. Abe also showed his recognition to regard the 2020 Olympics
as the fourth arrow of the Abenomics and vowed to accelerate the
regulatory reforms to boost the countrys industrial competitiveness.

 According to Abes direction, the government entered discussions on
an economic stimulus of about 5 trillion yen to prevent negative
impacts of the scheduled tax hike. It will likely include corporate
tax reduction on investment, public works projects toward the 2020
Tokyo Olympics, regenerative medicine like iPS cells, etc. At the same
time, the LDP lawmakers started specific discussions on the second
growth strategy pillared on the taxation system promoting financial
investment and industrial reorganization on Sep 11. The LDPs
Research Council on the Taxation System will draft specific
suggestions by the end of this month.

 But many have different ideas on an idea to reduce the corporate tax
rate (totally 35.64% both in the central and local governments, about
by 38% by 2014). While Amari and several advisors to Abe support the
idea to reduce the corporate tax, Finance Minister Aso and the MoF
showed a negative view. Within the ruling party, while the policy
chief Sanae Takaichi and Yasuhisa Shiozaki supports the idea on the
contrary to many Research Council members. The sharp confrontation
within the ruling party has been accelerated toward this years
taxation reform.

 Given the economic indicators considered to be serving as supporting
factors for a tax-hike, many view that Abe will raise the sales tax
rate as scheduled. Still, Abe and Chief Cabinet Secretary Suga
maintain the attitude that Abe will announce his decision on October 1
after examining the results of Bank of Japans business sentiment
survey. The background of such cautious attitudes by Abe and other
officials is the antipathy against the MoF which places the top
priority on a financial restructure rather than an economic recovery.
Abe seems to be seeking that the Cabinet will initiate the
budget-compiling process through containment policy toward the MoF.

 Meanwhile, Abe decided to reappoint all the LDP executive officers
including the Chairman of Diet Affairs Committee in order to manage
the next extraordinary Diet session in which the Cabinet plans to the
important bills regarding the growth strategy and national security,
power industry, social security, etc. Yet, there is only about a month
to discuss these Cabinet-proposed bills within the two month of the
Diet session. Although the ruling coalition dominates majority in both
Houses, it will likely be the key whether and how to obtain
cooperation from the opposition parties.

 On the other hand, the opposition parties will censure the government
for its slow response to the radioactive water leaks at the stricken
Fukushima no.1 nuclear complex. The ruling coalition plans to hold
hearings in the Diet while it is in recess on Sep 27 and 30, while the
opposition camp requests the hearings in an earlier timing. The
Cabinet will appeal its effort in the hearings.

 Toward Abes final judgment on the scheduled tax hike, the focal
point seems to have shifted to 5 trillion yen of the economic stimulus
to overcome possible negative impacts of the tax-hike. The political
bargaining among the Cabinet, the ruling and opposition parties will
likely be accelerated. The prospect of the economic stimulus requires
close attentions this week.


Lawsuits Simultaneous in 47 Prefectures

* Written by PPPC Visiting Fellow

 A day after the July Upper House election, a group of lawyers moved
lawsuits in all the prefectural courts to claim that the election in
which the disparity in the weight of one vote counted more than *4.77
was unconstitutional and invalid, and also that it requires Diet
measures to realize a truly fair vote election; so-called the fair
value of one-vote suit.

 The significant point here is that the group of lawyers moved the
motion in all the 47 prefectures simultaneously.

 Traditionally, there has been a judicial reasoning to avoid
sentencing that the election was invalid in order to avoid an incident
where the election system is to be changed while there was no lawmaker
from the relevant constituency as result of the courts judgment; a
scenario which the Constitution did not assume. In many cases such
conditional reasons has been applied to justify the past elections.

 However, this time, as the lawyers took the action in all the 47
constituencies and all the high courts will likely appeal to the
Supreme Court, it is expected that the Supreme Court lumps all the 47
constituencies together and gives judgment from either one of
constitutional, unconstitutional but valid, unconstitutional
and illegal, and unconstitutional and invalid indiscriminately.
It is important that the Supreme Court this time has difficulty using
conditional reasons in giving the sentence.

 It means that the scenario will not cause the circumstance in which
only a part of the lawmakers will lose the Diet seats. The cases will
also likely influence the Supreme Courts judgment over validity of
the 2012 Lower House election to be sentenced in autumn. The lawyers
tenaciousness for revolution toward a fair vote can be understood.

 In Japan, since 1960s to today, there have been lawsuits over
validity of the elections constantly for 50 years almost endlessly.

 Hidetoshi Masunaga, a leader of the group of lawyers, explains that
the background is the Supreme Court which never explicitly mentioned
the moral precepts


This continuance by PPPC Briefing Service

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Olympics to Bring Economic Reflation until 2020? : TPP and SpecialZones are the Keys.

*This is a translation of an article by Yoichi TAKAHASHI,
  PPPC Chairman / Kaetsu University Professor,
  written for Gendai Business website on September 9, 2013

 Tokyo won the right to host the 2020 Olympics. The news made many
Japanese simply happy in the early Sunday morning. The efforts made by
all concerned, including Prime Minister Abe and Tokyo governor Inose,
may deserve admirations, I think.

 Abe said “given the decision today, I want to overcome the
deflation-oriented economy lasting for 15 years” and Inose also vowed
to “break away from deflation of the mind”.

 Then, let me first summarize the economic impacts of the Olympics.

 The ripple effect released by the Tokyo metropolitan government sets
Tokyo and the neighboring areas during 2013-2020 as analytical targets.
It indicates that the induced products would amount to 2,960.9 billion
yen (1,675.3 billion yen in Tokyo, 1,285.6 billion yen in other areas).

 The figure was calculated through Tokyo’s original chart on the
inter-industrial effects. Its initial breakdown accounts 1,223.9
billion (Tokyo 966.9 bn., others 2.57 bn.) yen for the construction of
the Olympics related facilities, operational costs, accommodation and
food/drink by visitors. And as its first ripple effect the calculation
accounts additional 1.1 trillion yen premised on a special procurement
boom. Further, as its second ripple effect, it adds 600 bn. yen for
expanded consumptions by the laborers in the Olympics-related
industries. So finally the total sum of induced products will amount
to 2,960.9 bn. yen, the trial calculation by Tokyo seems to be saying.

<Tokyo Olympics with the existing facilities is a paying business>

 Besides 2,960.9 bn. yen of the induced products, Tokyos calculation
entails 1,421 bn. yen of induced added-values (Tokyo 858.6 bn., others
5.624 bn.) and 755.3 bn. yen of induced income for employees (Tokyo
468.7 bn., others 284.6 bn.) separately.

 Using the trial calculation by Tokyo, one construction company stated
in its website that the ripple economic effect of the Olympics will
amount to 5.135 trillion yen in total; a simple sum of those figures.
But the number is not right. To note, the induced products may entail
overlapping accounts as it focuses on the product-base alone. Also,
while the induced added-value refers to the profits, the induced
income for employees means the salaries of employees within the
profits. So, there is likely a threefold overlapping accounting in the

 Anyways, Tokyo metropolitan government also predicts that the
Olympics will induce 152,202 employments (Tokyo 83,706, others 68,496).

 Aside from these ripple economic effects, by simply looking at the
earnings and expenses of the Olympics since Los Angeles in 1984,
Olympics is no doubt a profit-making, commercial event.

 The main sources of earnings in the Olympics are (1) broadcasting
rights, (2) payments by sponsors, (3) admission fees (gate money), and
(4) sales of commemorative goods. In Tokyo, like in London, the
running costs can be kept low for the many existing facilities
avoiding additional construction costs for new stadiums, etc., and the
account will likely get into the black without much budgetary spending.
In any respect, the Olympics, moving the peoples feelings for two
weeks, is surely one of the fewest, most promising business projects
in the modern world.

<Cool views on the economic effects by economists>

 Quite a few economists have rather critical views on such the trial
calculations. Yes, indeed, such trial calculations usually have
certain assumptions which always accompany risks of being questioned
on their neutrality and rationality. But some critics seem to be
rather excessive on this point.

 First, some say that Tokyos calculation is based on a partial
equilibrium assumption that the other conditions are prefixed. For
that reason, such calculations do not take into consideration the
consumption and investment decreased due to the increased consumption
and investment by the Olympics, they would say. Such a criticism is
not off the point at all, indeed. For instance, it is like saying that
an expansion of public works projects in Tokyo would hinder the
reconstruction works in the quake-stricken areas because it mobilizes
labors even from the suffered Tohoku region. This sort of criticism
deserves a careful consideration, of course. Nevertheless, as it is to
be mentioned later, such counterarguments are rather of a minor kind
compared to the political aspect of hosting and preparing the Olympics.

 Another counterargument is such that while the hosting cities had
invested huge amount of money to construct the related facilities, the
same facilities and buildings would never be used in the future. But
it doesnt apply to Tokyo because Tokyo already has lots of existing
facilities and will be able to respond adequately just by simply
repairing them.

 There are yet other negative voices against the rushing demands for
construction and guarding expenses toward opening of the Games. But I
dont think the 2020 Tokyo Olympics costs a lot more than in other

<Exports will increase by 30 percent>

 Although it is generally the nature of economists to point out minor
points, there are the economists who speak of the noteworthy points
from a grand perspective. I remind of The Olympic Effect
co-authored by Andrew Rose and Mark Spiegel.

 According to the authors, the countries which hosted the Olympics
during 1950-2006 increased the international trades by 30% in average
mainly due to the free-trade and deregulatory measures simultaneously
undertaken with the Olympic Games. In short, it is to say that the
liberalization measures by the hosting countries to make themselves
look good actually contributed to their own economic growth as the

 The interesting point about the literature is the perspective that
the external, internationally-political aspect of the deregulatory
measures had a greater economic effect than the internal,
domestically-political aspect of the public works projects for opening
the Olympics.

 An application of this lesson to Japan today would be the TPP and
deregulation, the third arrow of the Abenomics. While the TPP
might bring short-term disadvantages to Japan, liberalization and
deregulation of the countrys markets will surely lead to a long-term
economic growth, as well as that some surprising experiments will
seemingly bring about further national interests.

<Ideas such as Casino and 24 hours-transportations>

 Tokyo governor Inose is the figure having insisted to establish and
legalize Casino in bayside Odaiba, and also who already partially
realized the 24 hours-running of the Tokyo metropolitan transportation
via internationalization of the Haneda Airport. Im sure the governor
Inose should come up with many ideas to select some Tokyo areas for
experimental deregulatory measures to realize forefront cities, and
the Abe Cabinet may simply approve them as the so-called Abenomics
Special Zones to advance the regulatory reforms even temporarily and
locally under the nominal aim of the Olympics.

 This is not a privilege to Tokyo. The Abe Cabinet is inviting any
ideas and proposals on the National Strategic Special Zones with local
originalities. As the primary aim of the governments Council on
Industrial Competitiveness this time is the regulatory reform itself,
it is hard to imagine that an excessively-deregulatory proposition
would be rejected as it was actually the case under DPJ governments
Comprehensive Special Zones.

 From my own experience as a government official, any regulative
reforms are demanding both in terms of times and energies, consuming
3-5 years from policy-planning, enacting processes to actually feeling
the policy consequences. This is to say that the seven-years-ahead
Olympics is apt for experimenting such long-term deregulatory measures.
While it would be odd to speak of an if…” story, I still believe
that a combination of the Olympics, the TPP, and the Abenomics Special
Zones may enable a long-term economic reflation until 2020.

 The Cabinet Office released that the economy had been in the
recovering phase for the 37 straight months since March 2009 till
April 2013. It means that March 2009 was the bottom and April 2013
was the top. Though the economic figures are not released
officially yet, November 2012 will likely be another bottom and
this will be a good news for the Abe Cabinet as it would mean that the
Cabinet experienced the second shortest 7 months of economic recession
compared to 16 months of the historical Cabinets in average.

 If November 2012 was really a bottom of the economy, there is a
possibility of experiencing the record longest 8 years of economic
reflation in the postwar Japan if Tokyo Olympics is appropriately and
successfully combined with the TPP and Abenomics Special Zones.


Proposal on regulatory reform in the agricultural sector submitted by a farm company, Shinsengumi

Proposal on regulatory reform in the agricultural sector submitted by a farm company, Shinsengumi

Shinsengumi is one of the proposers which focuses on agriculture and was invited to the hearing at the Working Group

Shinsengumi is a private company operating farming in Aichi prefecture.  Although most private companies are not allowed to own farmlands in Japan by regulation, there is an exception for privately-owned companies which meet strict requirements (e.g., shares are owned by conventional farmers, executive directors are engaged in farm-work by themselves, etc.), and the company is one of such exceptional ones.

Its CEO, Shigeaki Okamoto, who is a farmer for generations attended the hearing meeting on September 9, and made three significant proposals about agriculture.

The first proposal is to remove the restriction on corporate ownership of farmlands.
While it may sound strange as his company is allowed to own the farmlands, he insisted the restriction should be removed because it rules out the possibility that his company grows to be a publicly listed company and gains more capital.

The second proposal is to remove a restriction that deters banks from lending money to farmers, including farm companies.  There exist officially organized guarantors in Japan that provide guarantee services for small companies which often lack collaterals, but such guarantors are not allowed to guarantee farmers’ debts by regulation.  Due to that, most farmers cannot borrow money from banks and are compelled to borrow from the local agricultural cooperatives, narrowing financing opportunities for farmers.

The third proposal is to remove unreasonable restrictions on usage of farmlands.  For example, it is not allowed under the existing law to open a restaurant inside the farmland to provide meals using the farm products.  The reason for the restriction is that the farmlands must be used for farming alone and cannot be used otherwise, but obviously such restrictions hinder new inventions that can boost agricultural businesses.

These issues have been also proposed by some other companies and local governments, and the working group regards the issues as particularly important.

(Eiji HARA, PPPC President)

The government of Japan solicited proposals about deregulation measures to be taken in the National Strategic Special Zones from private companies and local governments from August 12 through September 11.

The government of Japan solicited proposals about deregulation measures to be taken in the National Strategic Special Zones from private companies and local governments from August 12 through September 11.

Before the deadline for proposals, the government started picking up good candidates and holding hearing meetings at the Special Zones Working Group from September 5.

So far (by September 13), 17 proposals have been selected for hearings; 6 of those are proposals by local governments (including joint proposals by local governments and private organizations), 4 of those are focusing on city planning, 3 on medical care, 2 mainly on agriculture.

September 5
Mitsui Fudosan Co. Ltd.
Four Prefectures (Aichi, Gifu, Mie, Shizuoka) and Three Cities (Nagoya, Shizuoka, Hamamatsu) in Tokai Region
Gate Tower Institute for Image Guided Therapy

September 6
Bayline Co. Ltd.
Mori Building Co. Ltd.
Kansai Economic Federation
Yabu City
Fukuoka City

September 9
Renaissance Academy Co. Ltd.
Nara City

September 11
Mitsui Fudosan Co. Ltd., Mitsubishi Estate Home Co. Ltd., Mori Building Co. Ltd.
NPO Mannen-yatou (perennial opposition)
Tokyu Land Corp., Kajima Corp., Kume Sekkei Co. Ltd., Albero Grande Co. Ltd.
Niigata City
Narita City, International University of Health and Welfare
Medical Corporation Aoi-kai

(Eiji HARA, PPPC President)


This Week’s “Nagata-cho” (3-10.Sep, 2013)

 On September 3, Prime Minister Shinzo Abe met economic and fiscal
policy Akira Amari and Finance Minister Taro Aso and was briefed on
the results of the government hearings to study the possible negative
impact of a consumption tax hike from 5% at present to 8% next April.
Abe said he would announce his decision in early-October after
examining the results of the next Bank of Japan tankan business
sentiment survey.

 On September 5, BoJ board of directors held a meeting and decided to
increase the monetary base by supplying additional 60-70 trillion yen
annually, announcing that the economy is in the phase of slow recovery.
BoJ president Kuroda announced his view that the economic recovery
will continue for a while. Whereas showing his view that the
scheduled-tax-hike wont influence the nascent economic recovery,
Kuroda announced to conduct a further relaxing monetary policy in case
the tax-hike hits the economy and the 2% of price target becomes
infeasible. Kurodas remark may be considered as a request to the
Cabinet to conduct the tax-hike as scheduled under the legislation
enacted last year as well as containment toward the voices against the
tax-hike within the government. Yoshimi Watanabe, president of Your
Party, criticized that BoJ should focus on beating the chronic
deflation and should not interfere with such a political matter as the

 The Cabinet Office released the revised growth figures for the
April-June quarter on September 9, announcing that the real GDP turned
to +0.9% (3.8% in annual rate) for the first time in the latest 6
quarters. Seemingly the figure was pushed by the business investment.
The nominal GDP, more closely linked to household spending, was
released as +0.9% (3.8% in annual rate), as well.

 There are the supporting factors toward the tax-hike such as the
result of the government hearings which 70% of the experts supported
it, the revised growth figures which indicated the economy positively,
and that Tokyo won the right to host the 2020 Olympics. Meanwhile, yet,
there are the persistent voices against the tax-hike as the economic
recovery is yet to be realized as actual feeling. For example, the
labor statistics survey released in July, while the total salary was
increased due to the bonus and other additional incomes, the basic
salary has been decreased for the straight 14 months. There are such
voices to request full countermeasures to prevent economic
deterioration before deciding the tax-hike.
 On September 10, Abe told Aso and Amari to compile countermeasures to
prevent the tax-hike from collapsing the economic recovery by
end-September. The ministers will likely prepare measures like a
supplementary budget and tax-reduction on investment. Abe will likely
announce the measures when he announces his decision on the tax-hike
in early October. Abe will likely announce his decision on either
October 1 or 2, after BoJ releases the last economic indicator.

 The Cabinet and the ruling coalition agreed to convene the
extraordinary Diet session on October 15, after Abe attends the summit
of the Asia-Pacific Economic Cooperation forum from Oct. 7 to 8 in
Indonesia. The session will likely be until early December. The
Cabinet will regard the session as arena for realizing the growth
strategy, and will seek passages of the legislations regarding the
industrial competitiveness, corporate tax-reduction on investment,
Japanese version of NSC, and the power industry reform.

 While the term of LDP executive officers will expire in
end-September, Abe announced on September 4 announced he would
reappoint all the executives in the current offices. Also, Abe
announced not to conduct a Cabinet reshuffle as its been less than a
year since the ruling coalition came back to power. Abe will cope with
the difficult challenges including the tax-hike, TPP talks, growth
strategy and the initial budget FY2014 with the current core members
in the Cabinet and LDP.
 Meanwhile, Abe will reshuffle about half of the vice-ministers and
parliamentary secretaries (about 50 seats) for considering feelings of
the LDP faction leaders as well as the middle and young lawmakers. Abe
will roughly arrange the nominations by September 20. Still, as about
30% of the lawmakers are reelected for more than 5 times, which is
normally considered as ripe for ministers offices by the partys
seniority rule, there are discontents over Abes announcement not to
reshuffle the Cabinet members.

 There is an increasing estimation that Abe will decide to raise the
consumption tax rate. Further, the government already started
discussing compilation of a supplementary budget on a premise of the
tax-hike. At the same time, the special advisors to Abe are opposed to
the scheduled tax hike.
 Abe maintained the attitude not to announce his decision until he
makes it even during the G20 summit meeting in St. Petersburg, Russia.
Lets see the prospect carefully.


Interview with Mr. Momoi, Principal of Renaissance Academy, an participant in the meeting of the Working Group on the National Strategic Special Zones on Sep 9.

※This is reprinted by the Tokyo Press Club

-What did you propose?

We suggested an establishment of “publicly-owned, privately-managed” schools which the government delegates management of public schools to the private entities.

I think Japan’s education since Meiji era had played a great role in raising the youths to achieve the country’s modernization and to catch up with the western civilization. However, Japan’s successful modern education has had aspects of uniformity, minus-point scoring and dis-originality, especially in public schools, which might be weakening the country’s international competitiveness in the globalized world today.

By outsourcing part of the public school management to the private entities, perhaps, the education world will be stimulated and more diversified, vital education will be available; I suggested the “publicly-owned, privately-managed” schools from such a viewpoint.

I proposed the following 5 types of schools in proposing the idea.

①      Global Schools (e.g., International Baccalaureat. Schools to train global elites)
②      Science Schools (schools to train creative youths especially in the natural sciences)
③      Agribusiness Schools (schools to train youths promoting agriculture as export industry)
④      Venture Schools (schools to train spontaneous business elites and entrepreneurs)
⑤      Hybrid Schools (schools that undertakes knowledge study through internet and character-building face to face. Diverse ways of education will be enabled.)

To realize such diverse types above, I suggested the following deregulatory measures.

1.       Outsourcing of public school management to private entities s need amendments to the School Education Law.
2.       School curriculum not restricted by the government guidelines s need amendments to the School Education Law and its bylaws.
3.       Free selection of textbooks (not necessarily the authorized textbooks) s need amendments to the School Education Law.
4.       Specialists such as businessman and engineers teach with official teaching licenses s need amendments to the Teaching License Law.

The suggestions above can be summarized as a “liberalization of contents of education”.
While the goals of the government guideline in each subject are highly sympathetic, the educational contents are just all-inclusive assuming that the teachers cover them all.

For the authorized textbooks are just the itemizations of the guideline, teachers would have little freedom to do educations in the ways suggested above as long as they use the authorized textbooks.

While there is an institution called exceptional measures for school curriculum, it is still largely premised on the government guideline and the exceptions are limited to “minor” ones like teaching in English.

And more, while it seems that those who have experiences in the real society are apt for teaching at schools today, the current teaching-license system is not the way such experienced persons would have motivations to become teachers.

There have been only 413 cases who acquired the special teaching license in the last 20 years.

Also, as for the special part-time lecturers system utilized 200,000 cases a year, it requires annual applications and some prefectures do not even adopt the institution even though there are the needs from schools at site.

For the lecturers, also, it is uneasy to apply for the system because it is just a part-time job and with unofficial teaching license.

-How did you feel about the hearing of the Working Group?

The members were very favorable. I think the members understood the urgency of diversifying the education by the “publicly-owned privately-managed” schools, and it seemed that the members realized the need for reforming the existing reforms.

One member asked whether we could handle all the 5 types suggested. I answered that while we are capable, as it is hard to do them all at once, the fifth “hybrid schools” were most desirable for the moment. Because we have correspondence courses in which 3,500 students are learning.

On liberalization of education, some member showed an anxiety that the education might be biased and students would become victims once it is liberalized. However, it seems to me an apprehension because the schools are still publicly-owned and there are the municipal checks and controls beforehand and afterward. Also there is an option to introduce a third-party evaluation system or census survey to students and guardians (second-party evaluation) if needed.

There was no opposition to my proposition today, and I think the hearing was a great step toward realization of the idea. If there are anybody from local governments interested in our proposal this time, please contact us. We’ll visit anywhere to explain the idea to realize the “publicly-owned, privately-managed” schools together.

Thank you.


An Interview with Mr. Shigeaki Okamoto, Shinsengumi Inc., who attended the meeting of the Working Group on the National Strategic Special Zones on Sep 9.

※This is reprinted by the Tokyo Press Club

The Invitation for Proposals Concerning “National Strategic Economic Growth Areas”

His Proposal document is here

-What did you propose?

Okamoto>We think of creating a profitable agriculture in the special zones. The key words are farmer’s independence and growth. I proposed the idea of “hometown lunch” which farmers do not only grow the raw material but also process the value-added food using their originalities.
The hometown lunch will bring profits to the farmers as business, and will also serve as a triggering device to transform the agriculture into a growth industry creating employments and reactivating the local communities.
For example, the current domestic price of (unpolished) rice is 12,500 yen/60kg, which does not bring about profits to the farmers, or rather loses their incentives and makes them more dependent on the government subsidies. They can’t survive the international competition, of course.
By simply processing rice into onigiri by the “hometown lunch”, the end price of rice will become as high as 140,000/60kg. And that profit will directly be reflected into the farmers’ incentives. And many regulative measures should be relaxed for that sake.
We seek to design a mechanism which sublimates local food cultures into the values of the urban consumers by relaxing the existing regulations on the land use and other local regulations.
First, we will establish headquarter in each special zone which places greatest importance on the farmers’ growth. The headquarters will be handed authority over the land use. Also, we’ll liberalize the credit loans to enable dynamic fund-raising by the agricultural corporations, freeing the farmers’ fund-raising method now exclusively dependent on the JA.
We seek the farmers’ growth and local revitalization through these deregulations.
Our specific ideas include “Kamakura Restaurant” in Akita prefecture which processes the mushrooms naturally grown in the fallow fields, plantation and tourism restaurants utilizing pebbles made of the local rice powder in Aichi prefecture, delivery of lettuce and other vegetables to the U.S. military bases in Okinawa prefecture, lamb/mutton restaurant to meet needs of Islamic visitors, etc.

-How did you feel about the hearing?

Okamoto>I think the passion of ours and the local farmers was fully delivered to the members.

Not only that the members understood our propositions, the questions from the members stood on the same perspective as ours and they were worth discussing for further considerations. We would like to move on to the next stage with the best efforts and ideas possible.


Comments of a National Strategic Special Zones Applicant

※This is reprinted by the Tokyo Press Club

September 5 at Kasumigaseki Bldg.

Comments of national strategy Zone applicant participants

-So you attended the meeting of the Working Group on the National Strategic Special Zones. What do you do, sir?

We practice special medical treatments for cancers near the Kansai Airport and examine patients from all over the country. We treat the patients known as “cancer refugees” given up in major hospitals and provide still other alternatives. In examining those difficult patients, we often find the Japanese regulations a little disturbing so we came here today to ask the government for regulative reforms. That’s one. And second, because we carry out the world’s most advanced technology so far, we requested the government to sketch a framework in which we can export such Japan’s technology to the foreign countries recklessly, thinking it leads to the country’s national interest.

-How were the responses and how was your impression at the presentation?

While it was difficult to explain our intension fully in a short time, I think the idea was understood by the Working Group members. The members were aware of the problems caused by regulations in Japan, and they gave further suggestions to our proposal oppositely.


National Strategic Special Zones started hearings

※This is reprinted by the Tokyo Press Club

The Working Group on the National Strategic Special Zones started hearings on the selected proposals to the proposers (local governments, private enterprises) on September 5.

According to Tokyo Press Club, the following proposers (organizations) were invited to the hearing this week.

September 5
Mitsui Fudosan  Co. Ltd.
Four Prefectures (Aichi, Gifu, Mie, Shizuoka) and Three Cities (Nagoya, Shizuoka, Hamamatsu) in Tokai Region 
Gate Tower Institute for Image Guided Therapy (Director Shinichi Hori, etc.)
September 6
Bayline Co. Ltd.
Mori Building Co. Ltd.
Kansai Economic Federation (Executive Director Koji Abe, etc.)
Yabu City (Mayor Sakae Hirose, etc.)

Fukuoka City