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).


Economic Policy Challenges after this autumn

(HARA Eiji, PPPC President)

While the media are full of reports regarding the Cabinet reshuffle, the more important question is what kind of challenges will a new Cabinet will cope with.

Prime Minister Abe’s intension seems to be going back to the economic policy in this autumn while setting aside national security legislation until the next ordinary Diet session.

There are a bunch of challenges in economic policy. The revised growth strategy released in this June announced basic ideas in corporate tax reduction, GPIF, JA reform, etc., which caused applausive reactions by the media. It indeed stepped into particulars compared to the last year’s edition which merely entailed general remarks, however, specific rates of corporate tax are to be discussed hereafter. Likewise, regarding the JA reform, which is only a part of tasks in Japan’s agriculture, any specific plans are to be discussed in the future; for example, the strategy did not touch upon the longstanding goal of private company’s entry into agriculture. In short, the revised growth strategy in June is still immature both in terms of completeness in individual policy area and inclusiveness as a whole, and its sequence simply depends on future efforts to expand and deepen the discussions.

Meanwhile, some government officials say this autumn’s most urgent political task is the local revitalization. Needless to say, it is important to deliver the positive results of Abenomics to every local economy. Yet, there indeed is a possibility that the politics gets back to the traditional, budget-allocative style under the slogan of “local revitalization” while leaving behind such demanding challenges as regulatory reforms or tax reforms.

So, let us note below a list of economic policy challenges the Cabinet should tackle after this autumn.
1.         Tax
l  What do with the consumption tax (hike to 10%)
l  Tax rate of corporate tax reduction
l  Others (expansion of tax measures on contribution, women’s promotion, tax imposition on assets, etc.)

2.         Regulatory reforms
l  Employment, foreigners
l  Agriculture, forestry, fishery
l  Medical care, nursing care, nursery school
l  Education
l  Infrastructure (transport, water, energy, etc.)
l  IT
l  IR

3.         Framework on companies and others
l  Enhancement on corporate governance (regulation on mutual-funding, etc.)
l  GPIF reform
l  Relooking on bankruptcy legislation
l  Relooking on monetary-supervision administration
l  Relooking on support policy to mid- and small-sized enterprises

4.         Utilization of infrastructure, private entry into governmentally-undertaken business
l  Airport, road, water
l  Privately-managed public school
l  National forest, fishery license, radio license, etc.

5.         Energy policy
l  Electricity reform, gas reform
l  Reconstruction of energy strategy including nuclear power

6.         Social security reform
l  Effective delivery of medical care, nursery care and nursing services (overlapping with regulatory reform)
l  Relooking toward sustainable delivery

7.         National Strategic Special Zones, decentralization
l  Local experiments to advance efforts in the fields listed above (NSSZ)
l  (in eye of) transference of authority and tax/financial source to local governments


When MOF Started Seeking Tax-Hike?

(TAKAHASHI Yoichi, PPPC Chairman)

Although the Ministry of Finance has devoted to its tax-hike policy currently, the ministry was not necessarily so when I was working. Financial reconstruction was the main policy of the MoF, needless to say, but the means for that aim was economic growth.

Coincidentally I found Ms. Mariko Fujii’s article “transition of national bond control policy in U.K.: 1694-1970” through the internet ( ). This article originates from an internal document jointly drafted by Ms. Fujii, former MoF career bureaucrat, and myself 30 years ago. Although Ms. Fujiii is a pro-tax-hike critic now, the article was written in a slightly different tone, saying that the British experience of financial reconstruction was “fundamentally enabled by natural increase of tax revenue having the economic growth and increase of national wealth as its background.” At that time, we briefed the document in front of the MoF executive officials and concluded that economic growth is the way for financial reconstruction.

I happened to have the original document in my hand. Because the original document has as many as 150 pages, let me summarize the paper in the following.

History of Government Bonds in U.K.

1.         This report outlines the history of public bonds in the U.K. by dividing it into 1) pre-1950s and 2) post-1950s periods in an effort to discuss factors and methods to decrease the public burden in the U.K. Although the history of U.K. government bonds can be traced back to as early as mid-17th century, it displays different aspects between pre-WWII period when the bonds were mainly issued for war expenditures and post-1972 period when the bonds were massively issued caused by financial deficits.
2.         The government bonds until the WWII were issued mainly for the purpose of financing the war expenditures. In other words, financial balance or a little surplus was premised during the peacetime. While the budget was once expanded during the WWI, it shrunk back after the war and therefore avoided financial deficits. It could be said that there was a “night-watchman state” view in the background at that time.
Expenditure items started to diversify from the end-19th century and early-20th century as social service such as education and social security expanded, and it speeded up after WWI and WWII. The financial size did not shrink back to the pre-war standards, which Peacock and Wiseman called “displacement effect.” However, in both the periods, 1) high-burden structure was maintained in due to the wartime tax-hike in the revenue, and 2) there were decreases of defense expenses in the expenditure, hence it didn’t lead to financial deficits despite the expansion of such social services. Therefore, even in the 20th century until 1970s the budget was normally maintained in balance during the peacetime and reasons for issuing government bonds were limited to Boer war in the 19th century and the two world wars.
3.         From the 18th to early-19th century, the government bonds showed increases during the several wartimes, and it amounted to as high as 844 million pounds (*2.9 to national income) in 1818 after Napoleon War (1795-1815). But the deficit gradually decreased toward end-19th century to 635 million pounds in 1898 (*0.39 to NI), and it again showed drastic increases due to the two world wars in the 20th century. The financial deficit in 1922 was 7.813 billion pounds (*2.03 to NI) and it amounted to 2.5771 billion pounds in 1946 (*2.55 to GNP).
In the history above, while the late-19th century (UK’s Golden Age) could be noted as the only period when the deficits showed persistent decreases, it was enabled by 1) natural increase of tax revenues backed by economic growth and expansion of national wealth, 2) economic contribution from colonies, 3) systematic redemption by partial-payment foundation and terminable pension and other factors. Note that other experiments of partial-payment foundation (1716-1788 Walpole, 1786-1828 Pitt) did not mark successful achievements.
The primary reason for the smooth reduction of financial deficits during the 19th century can be found in a high economic growth during the time.
4.         After the WWII saw aggressive utilization of the financial resources in efforts to achieve firm establishment of social security or perfect employment, though, the speed of deficit-expansion stayed in a low speed as the high-burden structure since the wartime was basically maintained; the financial deficit increased in a low pace of 1.6%/year during 1946-1971. Also the ratio of financial deficits to GNP decreased largely from 2.55 to 0.62 because of the high rate of economic growth at the time.
5.         The U.K. entered a new phase in its history of government bonds in the 1970s. The financial balance kept in the postwar period was finally broken after 1972 and the U.K got to have lots of financial deficits among other countries in the global economic recession. The candidate background behind the fact can be 1) tax reduction since 1971-1975 implemented as an economic stimulus, 2) increase in expenditures centered on social security under the Labor Cabinet in 1974-1975, 3) increased loans to nationally-owned industries, etc.
There were attempts to cutback expenditures in the late 1970s, and the Thatcher administration since 1979 tried to further reduce expenditures in the budget-making process to get rid of the financial deficits. However, they could not succeed in overcoming the deficits and the government has continued to issue massive government bonds thereafter. For that reason, the government debts skyrocketed from 35.8399 billion pounds in 1971 to 113.036 billion pounds in 1980 by 13.6% every year.
Meanwhile, the ratio to GNP has dropped from 0.62 (1971) to 0.50 (1980). This is probably because the nominal growth rate was higher because of inflation, rather than for economic growth.
6.         With regard to refinance policy, because most of the debts were eternal bonds before the WWII, low-interest refinanced loan was given important weights as means to lower burdens. Also during the wartime, because most of the bonds were issued at short-term, they were often refinanced as long-term loans after the war. However, it seems that the main attitude of the postwar bonds control policy has shifted its weight from the conventional “refinance as low-interest, long-term” orientation to “maintaining the market that maximizes ambitions of domestic and foreign investors to invest in the government bonds.”


Internet Sales of Medicines and Real Estates

(HARA Eiji, PPPC President)

While it is commonly said that the banning on internet sales of medicines has been lifted since this June as result of discussions for the past several years, as a matter of fact, it was far from “lifting” the ban.

l  Although Prime Minister Abe had announced an entire liberalization of internet sales of general medicines at the beginning, the banning on sales of 28 items recently switched from prescription medicines has been maintained.
l  Further, while it was not reported widely, the banning on internet sales of prescription medicines has remained untouched.

While the government’s explanation is a “high risk of using internet,” there seems to be no clear background on such an explanation.

l  It is indeed necessary to confirm customer’s anamnesis or possible side effects upon purchasing high-risk medicines. Still, the internet should be more apt to confirm plural checking points than over-the-counter.
l  While there is such a discussion as “it is important that pharmacists make judgment by using the five senses through face-to-face sales” (message of subcommittee chairman Igarashi read in a meeting of the Industrial Competitiveness Council on Oct 29, 2013), it is unknown what kind of judgments are to be made as result of exercising the five senses.

After all, it was nothing but preservation of interests of traditional pharmacies under the nominal reasoning of safety control.

And now, similar discussions are going on with internet sales of real estates.

The focal point of discussions has been the “explanation on important matters” based on the Real Estate Business Law.

Under the current framework, it is provided that
l  An officer-in-charge must give face-to-face explanations on the important points in the contracts.
l  And documents must be handed on that occasion (e-mail not admitted).
It means that any explanations through internet cannot be accepted.

Readers may think that “there should be small needs for internet in real estate dealings because people usually do on-site checks on the properties,” but it is not always the case.

For example, there are quite a few needs for processing such procedures as receiving explanations on the important points in the distance afterward even though they actually went to see the candidate housings in case of short-notice transfers of timeless business persons.

Also, even in the case of short-distance moving, there are needs for internet explanations for such reasons as “please explain it via videophone because we want to share it in family,” or “we prefer answers by e-mail rather than over-the-counter in order to keep record.”

However, the current legal framework declines such voices and states that explanations on important points must accompany “face-to-face” processes.

According to voices that such regulation should be relooked, discussions started in the Ministry of Land, Infrastructure, Transport and Tourism in its study group since April 2014.

Nonetheless, looking at the minutes of the meetings, there are quite many opinions opposed to internet sales for the following reasons.

l  Because people tend to look down (to read the documents) in case of videophone, it becomes difficult to estimate the extent of understanding by reading the customers’ faces.
l  Because the picture of videophone is not necessarily clear, ID duplication of officer-in-charge of real estate business cannot be prevented.

Here, let’s give it a little consideration.
l  People equally tend to “look down” in an over-the-counter dealing as well,
l  Because many people haven’t looked at the ID cards of officers in the first place, there is likely the case that we wouldn’t notice whether the ID is duplicated (countermeasures to duplication or imposture should be taken through different channels).
Doesn’t it sound like the discussion of “using the five senses…” at the time of medicines?

At present, the government is soliciting public comments on the study group’s “interim report” (until August 22). But unfortunately, it seems that the discussion is heading to a partial lifting of the banning on internet dealing of real estates in accordance with the cautious opinions mentioned above (for example, admission of remote contract of renting, etc.).

Note that this is still at the point of “interim report”, and it is strongly hoped there will be advancements in the discussions.


Real Effect of the Tax Hike

(TAKAHASHI Yoichi, PPPC Chairman)

I’ve been watching the economy since this April when the consumption tax rate was hiked. What raised my curiosity first was the family budget survey by the Ministry of Internal Affairs and Communications released on June 27.

Mass media did not report the survey because there were releases of the labor survey and the consumer price index by the MIC on the same day. That was the background of my article “Worst 2 in the past 33 years!” ( published on Gendai Business, which stimulated comments from everywhere.

Then I wrote an article “Index shows bad economic signs” ( given the poor figures released in the machine orders survey by the Cabinet Office on July 10. I wrote another article “triangular deterioration of consumption, housing and machine orders” ( on Diamond online given the bad figures in the house-building orders survey released by the Ministry of Land, Infrastructure, Transport and Tourism on June 30.

Despite all these bad figures, the government has maintained the view that “the Japanese economy is on a moderate recovery trend” and never mentions a recession. The Monthly Economic Report released on July 17 and the White Paper on Economic and Fiscal Policy released on July 25 were written on the exactly same tones, which caused me to write “Objection to the Monthly Economic Report!” ( and “strange analysis in the White Paper that denies negative effects of the tax-hike” (

The “bad figures” above refers to the fact that the figures show comparatively bad situations than the past two times of the consumption tax-hike.

Statistics is like a medical checkup and the economy can be diagnosed through various numerical figures.

What I have written in the recent articles is the warning hinted by the official statistical figures that the economy is on the verge. But the government’s explanation sounds as if the economy is getting better looking at the very few good points among all the other numbers in the medical examinations. It is like a doctor diagnosing the author who has metabolic syndrome as okay because a very few numbers showed a good sign.

However, given the June’s statistics on the mining and manufacturing production released on July 30, some private-sector economists or government officials started voicing confusion; its production index dropped by 3.3% from the previous month. Among 15 types of industry, 14 showed decreases and 1 performed a flat, and no industry showed a positive sign.

Especially problematic index is the stock, suggesting that unintentional overstocking is taking place.

The following chart indicates the stock-circulation with stocks in the horizontal and shipping in the vertical axes.

*Chart: by PPPC based on the mining and manufacturing industry index (Ministry of Economy, Trade and Industry)

It has shown a clockwise rotation in the process of economic cycle. It is located at 3/4 circulation as of June, which suggests that the economy will likely shift to a declining stage.

Let us remember that most economists at the time of last autumn were saying there would be no negative effect on the economy even if the consumption tax was raised. I wonder how they would explain the current situation.