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” (22-29.Oct, 2013)

 Last week on October 21-24, the meetings of Budget Committee in both
chambers of the Diet were held where the lawmakers challenged the
Cabinet led by Prime Minister Shinzo Abe over the negative impacts of
so-called Abenomics, consumption tax hike, contaminated water leaks at
Fukushima no.1 nuclear power plant, TPP negotiations, etc.

*The state of deliberations in both Houses and committees are
 available from the following websites. (Japanese only)
 House of Representatives Internet TV
 Live broadcasts and video recordings of the deliberations in the
 House of Councillors

 While the main opposition Democratic Party of Japan criticized the 5
trillion yen of economic stimulus package as a mere collection of
public works projects, Abes confident and straightforward manner
seems to have overwhelmed. Naturally, the opposition camp turned
toward Abes comment in Buenos Aires on September 7 that the
contaminated water problem was under control. Abe toned down the
rosy assessment and his words were less assuring concerning the
ongoing radioactive water leaks

 The ruling Liberal Democratic Party, started sketching special
measures that the national government will play a leading role rather
than leaving the responsibility to Tepco alone. LDP eyes legislation
of such bills to give rights to investigate and monitor the nuclear
power plants to the central government. The legislation will be
proposed in the ongoing Diet session as soon as LDPs minor coalition
partner New Komeito will accept the idea.

 The lawmakers entered discussions on Abes favorite bill to 
establish a Japanese-NSC in the Lower House plenary session on Sep 25.


This Week’s “Nagata-cho” (15-22.Oct, 2013)

 The leaders of political parties asked questions to Prime Minister
Shinzo Abe’s keynote policy speech on October 16-18.

*The state of deliberations in both Houses and committees are
 available from the following websites.(Japanese only)
 House of Representatives Internet TV:
 Live broadcasts and video recordings of the deliberations in the
 House of Councillors:

 The main opposition Democratic Party of Japan’s leader Banri Kaieda
stood on the Diet plenary session and argued on the Cabinet’s growth
strategy and its decision to raise the consumption tax rate from next
April as well as the 5 trillion yen of economic stimulus package.
Kaieda also demanded the Cabinet to explain on the relaxation of
employment regulations and controversial TPP issue that the Cabinet is
coping behind the scenes. Kaieda kept on censuring the government for
its slow response to the radioactive water leaks at the stricken
Fukushima no.1 nuclear complex. Abe countered these censures in
sensible tones.

 On October 16, the ruling Liberal Democratic Party and DPJ agreed to
establish a Diet Special Committee to discuss the bill of a national
security entailing ideas to create a Japanese version of the U.S.
National Security Council and tough penalties for ‘special secrets’
information leakers. DPJ plans to submit a bill to reform the
Information Disclosure Act designing a system in which the courts
decide whether to unveil the information in the new Special Committee.
The Lower House plenary session approved establishment of the
Committee on Oct 17, and LDP plans to enter discussions on Abe’s
favorite NSC bill as soon as possible. Meanwhile, the bill to impose
prison penalties for information leakers concerning foreign and
national policy will likely be approved by the Cabinet on Oct 25 and
be submitted on the same day.
 Also, LDP plans to submit the four bills submitted but shelved in the
last Diet session such as the bill on Livelihood Protection Law.

 On the social security reform, while there was a movement toward
resuming informal discussions among LDP, New Komeito and DPJ partly,
DPJ on Oct 16 decided not to return to the negotiation table for
political calculation to appeal confrontational attitude against the
ruling coalition to the public. Yet, the policy chiefs of the three
parties will continue discussions on the social security aspect of the
tax-hike. The arrangement was made officially on Oct 21 and the policy
chiefs will start discussions from the next week.

 The policy debates have been going on in the Budget Committees in
both Houses since Monday. The opposition parties plan to censure the
Cabinet for the defects of Abenomics, tax-hike and economic stimulus
package, radioactive water leaks in Fukushima, etc. Also, it is likely
that policy debates over the important legislations such as Industrial
Competitiveness, National Strategic Special Zones, the NSC and
‘special secret’ will be accelerated this week. Let’s watch the
extent of discussions on these legislations in the Diet carefully.

 Following is the state of ongoing deliberations on legislations in
the Diet.

■Deliberated Policies

As of October 18 (Fri.) based on the website of the House of
Representativesand other sources(
 *The links include Japanese websites only.

【 Industrial Competitiveness 】
○October 15, Cabinet “bill to promote the industrial competitiveness”
  The content:



Government Frankly Urging a Wage-Increase!?

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

 The economic and fiscal policy minister Akira Amari said we want to
make an environment in which companies would be embarrassed if they
didnt raise the wages even though their profits are rising. To me,
it raised a question whether the central government should pressure
private companies to raise wages in such a straightforward manner.

 Lets look at Amaris statement from two perspectives; political
and economic. First, from a political point of view, Amaris remark
scores almost perfect. All Amari said was what the labor unions should
have voiced strongly. Needless to say, a controller of the labor
unions is Rengo, the main supporter group of the opposition Democratic
Party of Japan. Since Amari only said what DPJ should have said on
behalf of Rengo from the ruling side, it was like beating DPJ at its
own game as a political strategy.

 From the beginning, although the monetary policy is recognized as an
employment policy in the western countries as it lessens unemployment
rates, the former DPJ government never attempted to consider its
utilization to increase employments. So it was obviously a political
defeat of DPJ when Prime Minister Shinzo Abe started mentioning the
relaxing monetary policy as soon as Liberal Democratic Party came back
to power. Perhaps, Rengo should have supported Abe Cabinet from the
beginning as it cares about the employment instead of DPJ which didn
t do anything. Amaris comment, touching a sore spot of DPJ and Rengo,
was a fitting one from a political viewpoint.

 However, Amaris remark is a failure looking from an economic
perspective. The monetary policy is helpful in terms of employment,
indeed, but its effect will usually be visible only after two years or
so. As it was this April when the Bank of Japan took the drastic
relaxing monetary policy, its policy effects will be observable from
around April two years later. Meanwhile, the Cabinet schedules to
raise the consumption tax rate from next April, and its negative
impacts on the national economy will be evident immediately. While the
Cabinet seeks to mitigate possible negative impacts of the tax-hike by
a 5 trillion yen of economic stimulus package, the amount of
government revenue expectedly increasing from the next fiscal year by
the tax-hike is some 8 trillion yen; further, the economic stimulus is
a temporary one for the fiscal year while the tax-hike will last ever.
Therefore, the private companies cannot help being cautious on raising
salaries of the employees because they cannot be opportunistic about
the socioeconomic prospects.

 To summarize, while effects of Abes first arrow monetary policy
is yet to be seen, Abes second arrow fiscal policy entailed just
5 trillion yen, amounting to only a half of the 10 trillion yen of
supplementary budget compiled this January and 5 trillion minus of the
last years economic package. Plus, the government officially
announced to impose more 8 trillion yen by the tax-hike.
 Many companies would probably like to request the government to
suspend the tax-hike which will likely bring unrests to the future of
society if the government demands them to raise salaries in an

 A few words for the minister Amari: please stop having an easygoing
idea that the situation could be handled by a little bit of corporate
tax cuts despite that you are raising the sales tax. It is more
embarrassing to raise the tax before the country eradicates deflation
and the companies find it easy to raise salaries of the employees 
given visible positive effects of the Abenomics.


Direction of Regulatory Reforms in the National Strategic Special Zones (draft)

※Government Decision on October 18, 2013

The government will advance the “National Strategic Special Zones” 
to create an environment in which it is easiest to do businesses in
the world to boost economic development by combining exceptional
measures from the viewpoint such as ‘international city to compete
with the world’ or ‘international innovation center of medical care’ 
to break through toward drastic regulatory and institutional reforms
to change the socioeconomic view of Japan.
In particular, the necessary legislative measures, including a
submission of the bill relating with the National Special Strategic
Zones, are to be taken in the extraordinary Diet session in the fields
of medical care, employment, education, city planning, agriculture and
historical buildings accordingly with the following directions.

1.Medical Care

◇establishing an ‘international medical center’ where the world’s
  excellent doctors are gathered and that provides the
  highest-standard medical services and where foreign residents
  staying or living in Japan or even people in the world would seek
  being treated. 

◇the bill to establish the National Strategic Special Zones to be
  submitted in the extraordinary Diet session will entail the
  following exceptional measures on the medical centers that expects
  certain numbers of foreign patients as ‘international medical
  center’ within the Special Zones. 

(1)Lifting the ban on medical treatments by foreign doctors 
     and nurses in the international medical centers 

・The government plans to expand the clinical training programs
  nationwide as institutional reform from the perspective of accepting
  high-skilled foreign doctors in the international medical centers. 
  Also, team-treatment s with foreign nurses combined with the
  existing clinical training programs will be available in the medical
  centers where the foreign doctors engage in treatments
・It is also expected that foreign residents will increase in this
  country, given possible effects of the 2020 Olympic Games in Tokyo. 
  Under the circumstance, the government will take measures such as
  expanding the subject countries to make bilateral agreements
  regarding doctors, expanding the number of doctors and accepting
  facilities, and lifting ban on medical treatments to foreigners in
  general in the Special Zones.

(2)Increase in the number of beds and floors by making 
     exceptions on the regulation over the number of beds

・It is expected that foreign residents will increase in this country,
  given possible effects of the 2020 Olympic Games in Tokyo. 
・In case of increasing the number of beds or newly composing them to
  provide high-standard treatments in the international medical
  centers, the headquarters to be established in each Special Zones
  will consider whether to admit the prefectural governments to add to
  the standard number of beds decided by the headquarters as eligible
  to provide the high-standard medical treatments. 

(3)Expansion of medical treatments not covered by public

・The government will construct an evaluation system to judge promptly
  possibility of admitting usage of medical supplies not allowed in
  Japanese medical centers providing as high standard of medical
  treatments as clinical central hospitals but approved in the
  countries where the medical standards are high. 

◇Consideration on establishment of new medical schools

・The government will consider possibility of establishing new medical
  schools after consultations with the related ministries, taking into
  considerations the possible effects of social security reform
  responding to the aged society and the original aim of the Special


◇The following measures will be taken and necessary provisions are to
  be entailed in the Special-Zones-bill to be submitted in the
  extraordinary session of the Diet in order that start-up and global
  companies can attract highly-skilled human resources and let them
  work skillfully and ambitiously. 

(1)Specification of Working Conditions

・The government will establish an ‘Employment Guidance Center’
  (tentative name) to make it easier for start-up and global companies
  to comprehend the employment rules in this country and to do
  businesses by an increased predictability so that the conflicts are
  to be deterred beforehand
・Also, the predictability will be improved and potential conflicts
  are to be deterred through an ‘employment guideline’ which is
  based on analysis and classification of the past court cases
・the Center, to be established under the unified headquarter in each
  Special Zone, will provide consulting and advisory services to the
  start-up and global companies at request from the preparation stage
  whether the labor management and the clauses of employment contracts
  are in line with the guideline mentioned above in order to
  contribute to their investment judgment
・The provisions above will be entailed in the Special Zones bill to
  be submitted in the extraordinary session of the Diet.

(2)Exception of Terminable Employment

・For example, the current legislation prohibits companies working on
  projects related to the 2020 Tokyo Olympics from hiring skilled
  workers with high salaries on basis of 7 year’s terminable working
・On this, the government will submit a bill in the 2014 ordinary
  session of the Diet after discussions in the labor policy committee
  on the necessary measures regarding employment contracts of
  the‘highly specialized’ employees with ‘comparatively high
  salaries’ engaging in important and temporary duties.
・The points above will be entailed in the bill to be submitted in the
  extraordinary session of the Diet.


◇The following deregulatory measures are to be taken in the Special
  Zones and necessary provisions are to be entailed in the bill to be
  submitted in the extraordinary Diet session. 

(1)Entry of Private Companies into Management of Public
     Schools (privately-managed public schools)

・There is an increasing need for raising global human resources
  through expansion of international baccalaureat or sports education,
  combined with the 2020 Tokyo Olympics. 
・Accordingly, the government will consider and take necessary
  measures within one year after legislation of the Special Zones bill
  after consultations with the related local governments to enable
  entry of private institutions into the management of public schools
  in the Special Zones while securing the quality and public nature of
  education from the viewpoint of providing diverse education in
  public schools. 

4.Urban and City Planning

◇The following deregulatory measures are to be taken in the Special
  Zones and necessary provisions are to be entailed in the bill to be
  submitted in the extraordinary Diet session.

(1)Relooking on the Land-use Regulations and Floor-Area-Ratio
     Regulations to Promote Urban Residential Buildings

・The government will promptly take exceptional measures such as that
  the central government initiates the city planning strategically and
  the unified headquarter decides the planning in the Special Zones to
  promote the urban designing to advance Tokyo as an international
  city toward the 2020 Olympics. The specific measures include a
  transfer of newly building residential apartments in urban areas to
  parts of office buildings. 

(2)Entry of Private Entities into Area Management
     (relaxation of road-use regulation to sophisticate the urban

・The government will relax the road-use standard so that private
  entities will be enabled to use the road spaces effectively such as
  to hold international events and build multilingual sign boards in
  urban areas or to open cafes.

(3)Exceptional Measures of the Hotel Business Act on the
     Accommodation Facilities

・It is expected that foreigners visiting and staying in Japan will
  increase, given possible effects of the 2020 Tokyo Olympics.
・Accordingly, the government will make exceptions to the Hotel
  Business Act regarding the paid housing facilities fulfilling
  certain conditions meeting needs of the foreigners even if their
  usages are less than for 30 days. 


◇The following deregulatory measures are to be taken in the Special
  Zones and necessary provisions are to be entailed in the bill to be
  submitted in the extraordinary Diet session.

(1)Application of Credit Insurance to Agriculture

・The agriculture combined with commercial and industrial activities
  will be enabled to raise funds more easily from the financial
  institutions by obtaining credits of the credit insurance
  associations premised on certain burdens on the prefectural

(2)Admission of Farmer’s Restaurants in Farmlands

・the government will relax the conditions for the farmers to open
  restaurants located in their own farmlands that provide the
  agricultural products or the goods manufactured and processed in
  the areas.

Also, the government will advance further considerations on
demarcation of the mayoral branch and agricultural committee in the
municipal governments as well as relaxation of farmland ownerships by
private entities. 

6.Utilization of Historical Buildings

◇The nationwide regulatory reforms are to be undertaken promptly.

(1)Exclusion from Application of the Building Standard Act to
     Utilize Historical Buildings such as Archaic Houses

・While many ‘historical buildings’ such as archaic private houses
  in many regions not officially designated as the cultural heritage
  are being abandoned lately, there is a rapidly-increasing need to
  utilize them as accommodations, restaurants, satellite offices, etc.,
  as spots for local promotion or international tourism. 
・Also, it is likely that an increasing number of foreigners will
  visit and staying in Japan, given possible effects of the 2020 Tokyo
・Accordingly, the government will design systems to enable new
  expertise councils (composed of experts on the utilization of
  historical buildings or the safety of the buildings) to admit
  exceptions to the Building Standard Act without the conventional
  individual screenings by the housing investigation committees in the
  local governments so that more historical buildings will be utilized
・Meanwhile, the government will consider institutional designs to
  share the relevant information and accept consultations from the
  local governments in order that the chiefs of fire stations can
  decide exceptional measures to the fire law’s 32th clause on more
  historical buildings smoothly. 
・Further, the Cabinet Office will consider cross-ministerial
  organizational arrangements to promote utilization of the historical
  buildings nationally to revitalize and accelerate the local economy
  and international tourism.

◇The following deregulatory measures are to be taken in the Special
  Zones and necessary exceptional provisions are to be entailed.

(1)Exceptional Measures of the Hotel Business Act on the
     Historical Buildings

・Parts of the building standards provided in the Hotel Business Act
  will be excluded on the historical buildings selected by the local
  government’s ordinances fulfilling certain conditions (For example,
  admitting management of hotels having no front desks as long as they
  have video cameras or contact desks operating 24 hours a day). 


National Strategic Special Zones: Result of Focal 15 Items

=Advanced, ×=Not Advanced, =Partly Advanced

Menu of Regulatory Reform
1.Medical Care

(1)Practice by Foreign Doctors
Paved the way for foreign patients
  ‘to Japanese patients’ left behind
(2)Regulation on Number of Beds

(3)Treatment not Covered by Public Insurance

(4)New Medical Schools

Specification of Working Condition, Terminable Contract, Working Hours
Achieved the original aim of ‘specification of working condition.’
’terminable contract’ to be programmed nationally in the next Diet
’working hours’ left behind
(privately managed public schools)

4.City Planning


(2)area management

(3)residential apartments for accommodation


requiring further considerations

(1)Agricultural Committee
(2)credit insurance
(3)expansion of farmland use
(4)regulation on farmland ownership
6.Local Assembly
Eligibility for Election
requiring further considerations nationally
7.Historical Buildings


Special Zones as Touchstone for Japan’s Globalization

※This is a translation of an article by Tomoyuki ISOYAMA, economic journalist,
  written for Gendai Business website on October 9, 2013

“Special Zones for Employment Reform” facing vigorous oppositions

Abe Cabinet is nearing the final stage of elaborating specific plans on the National Strategic Special Zones recognizing as the “breakthrough toward regulatory reforms”. Since the Cabinet’s growth strategy approved and released on June 14 attracted the public criticisms as inadequate from the market and elsewhere, especially in the fields of medical care, agriculture and employment, the Cabinet will try further reforms in these fields within the boundary of the Special Zones this time.

While the relevant government ministries have shown the vigorous oppositions, the Working Group on the National Strategic Special Zones (chaired by Tatsuo HATTA, Osaka University Invited Professor) in the Cabinet Secretary has been sketching out the policy suggestion. After Prime Minister Abe’s final judgment, the suggestion will be submitted as bill to the next extraordinary Diet session starting on October 15.

Among the detailed plans by the WG, the “Special Zones for employment reform” is the one facing the severest oppositions.

The WG puts that the government should make an “environment in which it is easy for the global and start-up companies to attract able human resources and for the able employees to work in such companies.” Currently, according to the WG, it is banned by the legislation if a foreign country wanted to employ some experts for a few years’ project in Japan by terminable contracts.

Therefore, the WG’s draft suggestion entails the specific measures in the Special Zones such as “exceptions of terminable employment” as well as “specification of rules for dismissing employees” and “exceptions to working-hour regulation,” etc.

While the existing legislation puts that the employees whose terms extended five years under terminable contracts would acquire the right to shift to indefinite employment contracts, the proposition will enable companies to sign contracts “not to promise indefinite employments” in the Special Zones. Also, it will specify the rules for firing the employees by explicitly defining conditions and procedures in the contract documents.

A subcommittee of the government’s Industrial Competitiveness Council in charge of the theme of “labor/employment” led by Takeda CEO Kanji HASEGAWA and the WG’s HATTA, started discussions and consulting with the Ministry of Health and Labor in this September. But the Ministry has opposed the idea from the beginning as that “the condition of employment should be nationally uniform and it is not suited with the Special Zones.”

Negative campaign by media on the dismissal-rule

Heizo Takenaka, Keio Gijuku University Professor, presented an A4 paper in the meeting of the Industrial Competitiveness Council on October 1 and commented as the following.

“…unfortunately, there was no progress especially in the field of ‘employment’. And I’m also concerned about the possibility that firmly-standing reforms will be stopped by some inaccurate media reports. We will continue the full efforts to complete the National Strategic Special Zones including the field of employment.”

Here, Takenaka’s “inaccurate media reports” refers to a series of articles and reports in end-September by the major papers; they titled the headlines like “special zones for firing workers” and cited an example case as that “you are fired because you are late.”

As a matter of fact, the WG’s discussion focused on a ‘specification of rules’ for dismissing employees, not on how to ‘make it easy’ to fire them. Although there is the so-called “4 principles on dismissal” through an accumulation of the judicial precedents, there is no knowing of the consequence in fact in case of lawsuits. And a basic idea was that such low-predictability in court cases has in turn prevented the foreign- or venture-companies from hiring new employees.

Also, the WG had considered a possibility of denouncing unfair, inappropriate clauses of labor contracts such as “you’re fired because you’re late” by making a guideline.

Sources said that Professor Hatta and other members, frustrated by the media report, sent a note of protest to the major paper on September 30, pointing that the report had lost touch with and therefore was not based on the actual discussions in the WG.

On such ‘distorted’ media reports, a member of the Industrial Competitiveness Council thinks “obviously it was a conscious campaign,” as there was a preliminary skirmish in this March-April.

When the Industrial Competitiveness Council started discussions on the ‘specification of rules for dismissing employees,’ the major papers repeatedly released the similar articles headlined as “making it easy to fire,” “relaxation of employment protection,” etc. And a left-wing political party backed by the labor union adopted the same tone of argument. As the result, Prime Minister Abe had to suspend the discussion for fear of negative impacts on the ruling party in the July Upper House election.

To note, the exceptional employment rules in the Special Zones this time is targeted at limited companies and employees. It is limited within the Special Zones, and applied only to the global companies with certain ratio of foreign employees or the start-up companies younger than five years old.

Moreover, the subject employees are limited to “able human resources” such as licensed experts like lawyers and CPAs or those acquiring the master’s or doctor’s degree. Indeed, it is applied to a limited part in the internationally-competing global- or venture-companies.

Also, the WG’s suggestion entails an idea to enhance a monitoring function within the Special Zones to prevent unfair labor contracts or illegal actions like coercive contracts.

Ambiguous dismissal-rule is just a ‘risk” to foreign companies

Still, the Ministry of Health and Labor and left-wing parties have a strong feeling against such deregulations. The Health and Labor Minister Norihisa Tamura stated in end-September that “I recognize the legislation to protect the laborers as part of the human rights guaranteed by Japanese Constitution. I doubt whether different measures could be taken inside and outside the Special Zones.”

The Minister himself showed the cautious attitude by citing even the Constitution. Tamura and his Ministry may be concerned about the possibility that the Special Zones will eventually destruct the whole labor/employment legal framework. According to them and the labor union, perhaps, the current judicial precedent making it difficult to dismiss the full-time employees is a ‘result’ gained through the past struggles so that they cannot make any concessions on this point.

Yet, Prime Minister Abe has repeatedly stressed and called for “investment in Japan” in the international meetings recently. But Japan’s ambiguous rule on hiring/dismissing employees is actually becoming the stumbling block as a ‘risk’ for the managers of global companies. It seems to be reasonable to specify the rule in the form of employment contract as in the western countries.

In order to increase employments in the global economy, it is needed to have foreign companies to do their businesses in Japan and hire more Japanese employees. The “Special Zones for employment reform” will be a touchstone to see whether Japan will truly be internationalized.


This Week’s “Nagata-cho” (8-15.Oct, 2013)

 An extraordinary Diet session opened on Oct 15, slated to last until
December 6 for 53 days.

*The state of deliberations in both Houses and committees are
 available from the following websites.can be seen. (Japanese only)
 House of Representatives Internet TV
 Live broadcasts and video recordings of the deliberations in the
 House of Councillors

 In his keynote policy speech at the Diet on Oct 15, Prime Minister
Shinzo Abe focused on domestic economic issues including (1) relaxing
monetary policy, (2) fiscal policy and (3) growth strategy, a policy
area where he has enjoyed successes so far. Meanwhile, however, Abe
added that Japan has only gone halfway toward eradicating deflation
and discussed deregulation to urge businesses to invest more to
realize further economic circulation.
 Abe also emphasized he will accelerate reconstruction of damaged
infrastructure in the Tohoku region, in particular in Fukushima
Prefecture. On the radioactive water leaks at the stricken Fukushima
no.1 nuclear complex, We wont leave all the (water) issue to Tepco.
We will carry out our responsibilities, working on the front line,
Abe emphasized.
 On the diplomatic policy, Abe argued Japan should become a
proactive contributor to the peace and stability of the world and
called for creation of a new national security council.

 The question sessions against Abes general policy speech are to be
held on Oct 16-18 in both chambers of the Diet. The Budget Committees
will be opened in both Houses subsequently. The opposition parties
have prepared to censure the government for the slow response to the
radioactive water leaks in Fukushima, consumption tax hike, TPP
negotiation, new labor rules to lay off workers, etc., in a
confrontational manner. The leaders of seven opposition parties
gathered on Oct 11 to discuss tactics toward the Diet session and
affirmed to demand the Cabinet to establish a Special Committee to
discuss the TPP issue alone, as well as to meet regularly to discuss
the Diet tactics constantly. But the ruling Liberal Democratic Party
is negative on responding to the opposition camp in open Diet
Committees on the ongoing TPP negotiations as it may entail secret
information. Yet, LDP might agree on an establishment of the new
Committee in the next ordinary Diet session to be convened next January.



This Week’s “Nagata-cho” ( 1-8.Oct, 2013)

 The Cabinet approved on Oct 1 the plan to raise the consumption tax
rate from five to eight percent on Apr 1 as scheduled in the
legislation passed under the former Democratic Party of Japan
administration. At the same time, the Cabinet agreed to sketch a \5
trillion economic stimulus package to mitigate potential negative
impacts of the tax-hike on the countrys nascent economic recovery.

 Bank of Japans survey on the economic sentiment released on the
same day marked the record +12 in the post-Lehman years. Along with
the other economic indicators showing positive signs that the economy
has picked up, it had propelled the governments Council on the
Economic and Fiscal Policy to show a green-light on the tax-hike.
Accordingly, Prime Minister Shinzo Abe announced he will raise the tax
rate as scheduled on Oct 1. Abe also announced the \5.1 trillion of
government revenue expectedly increasing from the next fiscal year by
the tax rise will be allocated to the social security alone as pledged.

 Over an idea to end special corporate tax surcharges for
reconstruction in disaster-hit Tohoku a year earlier than planned, the
ruling Liberal Democratic Party failed to obtain its coalition partner
New Komeitos agreement and the two parties merely agreed to revisit
the proposal by years end. Abe has also repeatedly announced
corporate tax reduction to boost the broader economy and to attract
more foreign business investment, but many lawmakers in LDPs tax
panel and Komeito do not buy the idea. Meanwhile, the Ministry of
Finance, led by Deputy Prime Minister Taro Aso, insists of some
alternative tax targets in case of the corporate tax cut. It is to see
how Abe and his Cabinet will negotiate with the lawmakers and the

 The minor coalition partner Komeito has suggested an earlier
designing of reduced tax rates on the daily necessities like food
prior to the next elevation to 10 percent in October 2015 and urged
Abe to announce an introduction of the design within this year. But
many Cabinet and LDP members voiced cautiously on the notion. The
interparty talks will likely continue.

 Chief Cabinet Secretary Suga told the Rules and Administration
Committees in both Houses officially that the Cabinet will convene the
next extraordinary Diet session on Oct 15. The session will be for 53
days until Dec 6. Although the ruling and opposition parties are yet
to reach an agreement on the schedule of Prime Ministers general
policy speech and Q&A by the party leaders, the main policy issues in
the session will likely include the tax-hike and economic stimulus,
social security reform, employment regulation, diplomacy and national
security, TPP talks, the contaminated water leaks in Fukushima, etc.

 Abe and his Cabinet plans to submit the bills regarding the third
arrow growth strategy one after another based on the Course of
Action officially approved on Oct 1, such as the bills on industrial
competitiveness, power industry reform and farmland management, etc.
On the other hand, the opposition parties, while having diverse
attitudes on the tax-hike, are preparing to question the Cabinet on
the legitimacy and reasonability of the tax-hike and economic stimulus
package. While DPJ will challenge the Cabinet centering on the social
security issues, Your Party will demand the government to tackle with
other challenges like the civil service reform and administrative
reforms. The Communist Party is strongly repelled by the governments
policy to end the special corporate tax deduction in Tohoku and the
deregulatory measure in labor suggested by the governments panel on
the regulatory reform.

 In the field of diplomacy and national security, the Cabinet plans to
submit bills to enable SDF to transport Japanese living abroad, to
establish Japanese-version of National Security Council, and on long
prison terms mandated for leaks of top-secretary information. The
third, secret-information bill has caused a particularly strong
opposition. The duration of time to be allocated for discussion on the
bills regarding the NSC and secret-information will likely be for only
about 5 weeks. For there are many bills the Cabinet plans to submit in
the next Diet, the ruling camp risks walking a tightrope in
time-managing the session although it dominates the majority in both
Houses. For this, the ruling camp plans to establish Special
Committees in both Houses to discuss on the bills instead of referring
the bills to the existing committees. Adversely, the opposition camp
requests an establishment of a Special Committee on the TPP instead.

 LDPs intraparty discussions on the TPP and exceptional items on
tariff policy are to be resumed soon, according to chairman of the LDP
s TPP committee Nishikawas press comment on Oct 7. Also the
lawmakers will consider countermeasures regarding Japans agriculture
in case the tariffs are eliminated. Chief Cabinet Secretary Suga
stressed that the Cabinet will act in concert with LDP. While some
lawmakers are showing the attitude accepting parts of the focal five
items to be excluded from the exceptions, the oppositions from more
protective lawmakers seem to be inevitable. On Oct 3, a group of LDP
lawmakers passed a resolution to demand the Cabinet to retreat from
the TPP negotiations in case the sanctuary fields are not to be
maintained. Intraparty bargaining will likely be accelerated toward
the reconsideration. The opposition parties will strongly censure the
ruling camp from both sides of pros and cons of the TPP.

 The extraordinary session will start from the next week. There will
likely be active negotiations and bargaining behind the scenes. Also,
what will Abe speak in the general policy speech and what sort of
attitude will Abe state over the important legislations to be
proposed? Lets watch the prospects carefully.