National Strategic Special Zones: new challenges found in meetings in September

(HARA Eiji, PPPC President)

With regard to the National Strategic Special Zones, meetings of the “Regional Committee” were held consecutively in the “Kansai” and “Fukuoka” zones last week (September 24, 25).

Those who attended the meetings include the new minister-in-charge Shigeru Ishiba, along with the relevant governors and mayors, and the author myself as a member of the NSSZ working group. Through the meetings, it was strongly recognized that the framework of the regional committee itself must be enhanced.

The regional committee was created as quasi-independent mini-government in the Zones composed of the central government (minister), local government (mayor/governor) and private sector. The committees were launched one after the other after selection of the six zones in spring, and entered full-dress discussions since this June. Still, it seems that the committees haven’t functioned in their full capacity yet.

Especially in the Kansai zone, it was sometimes observed that representatives of the central government, local governments and private sector haven’t shared their views on the topics adequately and discussions fell as far apart.

As it was discussed in the meetings, in order to make the committees function fully as an independent mini-government, it requires a firm, full-time secretariat; no way that they gather once a month to hold meetings (it doesn’t mean to establish a new bureaucratic organ but to create a common secretariat by attracting personnel from the central or relevant local government).

On a related note, it was widely reported that the Osaka City assembly rejected proposal of NSSZ-related ordinance and suspended its project (to utilize housing apartment to hotel businesses by allowing exceptions of the Hotel Business Act).

On this project, while it was proposed that the minimum days of staying (7-10days) of target exceptional measures would be arranged by the ordinance, it was questioned from the view of neighboring residents in the discussion process and led to rejection of the ordinance. As the result, the NSSZ-relevant project itself was suspended.

Set aside the political situation of Osaka City that any proposals by the mayor besides the NSSZ-related ordinance face difficulties passing the assembly, the issue relates with the essential nature of the NSSZ design.

The NSSZ is designed as a framework to implement regulatory reform measures experimentally in the local boundary, and the reform measures are to be provided in the NSSZ Act as reform menu; and in each zones the central government, local government and private sector implement the reforms altogether.

The incident in Osaka means that a local government denied the regulatory reform menu discussed and approved in the national Diet. However, such a situation that assemblies of the central and local governments respectively discusses the regulatory reform menus one after another may contradict with the goal of the NSSZ to implement regulatory reform experiments in a speedy manner.

While enhancing the framework of the regional committee, roles of the national Diet, local government and regional committees need to be further clarified in line with the purpose and aim of the NSSZ.

In the autumn’s extraordinary Diet session, it is scheduled that a revised NSSZ Act will be submitted to arrange the additional regulatory-reform menu (foreign worker’s visa, privately-managed public schools, etc., which were entailed in the revised growth strategy in June). Meanwhile, the NSSZ faces the challenge of enhancing the framework of the regional committees to realize effective regulatory reforms.

Current State of Agricultural Reform

(HARA Eiji, PPPC President)

In the new Japan Revitalization Strategy revised in June, we were able to observe firm advancements in the agricultural reform.

It may be applauded that the Cabinet mentioned reforms of Japan Agriculture which has long been considered as a difficult challenge.

Yet, it does not mean a happy-end by itself. Let us summarize the past achievements and remaining challenges here.

First, in the field of agriculture, many have shared an understanding on what should be done for many years.

The bottom line is to heighten productivity in the management of agriculture and to rear up farmers with ambitions and abilities. To that end farmlands need to be consolidated and agricultural policy must break with measures that distribute subsidies to al farmers uniformly.

Such a viewpoint has been shared from the 1960s when Basic Act on Agriculture was enacted and Ogata village kicked off. However, there have hardly been major advancements for generations and it resulted to the present agricultural situation.

In the 2000s, under the Basic Guideline on Economic and Fiscal Policy in 2002, such measures as the following have been taken.

i.              Expansion of corporate entry into agriculture

ii.              New grant system limiting subject to ambitious farmers with certain size of farmlands

Although there were certain accomplishments due to these efforts, it hasn’t fully come to light as there was a certain kind of backward movements.

Under the current circumstance, the remaining challenges in the agriculture can be listed as follows.

1.         Businesslike management of agriculture

<Relaxation of conditions to be qualified as agricultural production corporation>

Currently, only the agricultural production corporations are allowed to own farmlands and there are strict conditions on an establishment of the corporations regarding financial composition, membership of directors, etc. Such restrictions have prevented Japanese agriculture from switching into businesslike management styles.

2.         Measures to consolidate and make effective use of farmlands

<Reform on Agriculture Committee>

Currently the agriculture committees in the municipal government, composed of elected (often nonelected) local bosses, dominate authorities over the right to use and shift ownership of farmlands. It often results to exclusion of entry of newcomers.

<Others>

For more, there have been debates to promote effective utilization of farmlands from the viewpoint of tax.

3.         JA reform

Traditionally, many farmers who are not likely to grow have barely survived by thoroughly depending on the JA (procure materials from JA, borrow loans from JA, receive government grants via JA, produce goods in accordance with JA instructions, deliver goods to JA, etc.). Meanwhile, independent, autonomous management style of agriculture has been disliked.

4.         Reform on rice adjustment system and price control

It refers to the rice adjustment system and exclusion of price competition by trade barriers.

With regard to these challenges, efforts of the Abe Cabinet can be summarized as the table1.

l  Farmland Consolidation Banks Act was enacted in 2013,

l  Regional experiments of reforms have been arranged in the National Strategic Special Zones in 2014

In addition, there were further advancements in the revised Japan Revitalization Strategy in June.

As is clear from the table1, there have been advancements on the themes which have long been considered as difficult, and surely it makes a big step forward.

Efforts of the Abe Cabinet
	2013	NSSZ Act è  implemented in spring 2014	Measures arranged in the Revised Japan Revitalization Strategy in June
Condition of Agricultural Production Corporation		Exceptional measure on directors (accepting single director)	l  Relaxation of conditions of directors l  Relaxation of conditions on membership (no limits up to 1/2 members) è Next Diet session
Consolidation, utilization of farmlands	Farmland Consolidation Banks	l  Shift of authority from agriculture committee l  Expansion of effective use (farmer’s restaurant)	Reconsidering composition of agriculture committee è Next Diet session
JA reform		l  Credit loans to agriculture	l  Relooking JA-Zenchu l  Corporatization of JA-Zennoh è Next Diet session
Reform on rice adjustment system and price control	l  Abolishment of rice adjustment system? l  Participation in the TPP negotiations

In the meantime, there are remaining challenges to be noted.

①       The Japan Revitalization Strategy is only at the stage of drafting and specific measures are to be arranged hereafter.

②       There are further points to be reconsidered in each challenge (table2).

I.          With regard to conditions to establish agricultural production corporation, it is still problematic that the law provides “more than 1/2 of investors must be those engaging in agriculture.” This provision makes it difficult for ordinary companies to enter into agriculture by owing farmlands, and for ventures to seek being listed, as well.

II.       While it was arranged to transfer from the election of committee members to nomination by mayors with assembly’s consent, it might result to a mere fact that the same members will be selected as ever. It requires further specific organizational devices to really change the actual state of the agriculture committee.

III.     With regard to the JA reform, it is yet clear what kind of organizations both Zenchu and Zennoh will be rebuilt into (although Zenoh will be “corporatized,” it is yet known who will be the shareholders and by what percent). It all depends on the future discussions on their organizational designs.

Items arranged in the Revised Japan Revitalization Strategy and remaining challenges

l  Condition of Agricultural Production Corporation ²  “more than 1/2 of investors must be those engaging in agriculture” è Neither ordinary companies can entry, nor can agricultural production corporations be listed. ²  “further relaxation of condition will be reconsidered after five years…” l  Agriculture Committee ²  “abolishing the election system,” “nomination by mayors with a requirement of the assembly’s consent” l  JA reform ²  “central union will shift to a new autonomous institution” ²  “Zennoh will be able to turn into a stock company invested by JA”

We need to keep paying attentions to these points in eye if the next ordinary session of the Diet.

On Operation of the National Strategic Special Zones

　　　　　　　　　　　　　　　　　　　　　　　　　June 17, 2014

AKIIKE Reiko

SAKANE Masahiro

SAKAMURA Ken

TAKENAKA Heizo

　　　　　　　　HATTA Tatsuo

1.         Operation of the Regional Committee

Among the six special zones selected, some zones schedule to establish the “Regional Committee” as early as in this June. It is important that each zone launches highly-effective “Regional Committee” in a swift manner.

2.         Firm Implementation of the Initial Reform Menu

The initial regulatory reform menu entailed in the National Strategic Special Zones Law must be, needless to say, implemented firmly.

With regard to the privately-managed public schools, the Law provides it be legislatively designed “within one year or so.” Accordingly with the provision, necessary legislative measures should be taken immediately. In that process, attentions must be paid to prevent some excessive restrictions or regulations from being imposed.

3.         Toward Additional Regulatory-Reform Menu

①       Second Invitation for Proposals

The Basic Policy of National Strategic Special Zones provides that invitation for proposals be held at least twice a year. Toward swift addition of the reform-menu, the process of second invitation for proposals should be advanced in this summer, following the last year’s schedule (invitation in July, results to be released by September after consultations with the relevant government ministries).

②       Specific Reform-Menu Likely to be Proposed

Based on the past discussions and others, such menu as the following including tax measures will likely be proposed in the Regional Committee to be launched. With regard to proposals to be proposed including the following, swift considerations must be given from the viewpoint of putting weights on operation of the Regional Committee.

<Foreigners>

l  New institutional arrangements must be designed with regard to qualification of foreign residents as startup personnel or Cool Japan human resources, for example, that the Regional Committee handles its standard-making and operation.

<Employment>

l  New ways of working-hours regulation must be considered in eye of startup companies.

<Tax>

l  Tax measures in accordance with governance reforms of companies and universities (corporate tax reduction, expansion of donation-easy tax system, etc.)

4.         Organizational Arrangements for Promotion of Further Reforms

There is only one-year-and-half remaining for the government to realize Prime Minister Abe’s international pledge to “break through the solid rock of vested interests…over the next two years” announced in January this year.

In order to steadily accelerate reforms of bedrock regulations, comprehensive organizational arrangements for promoting various kinds of reforms, such as regulatory reform, special zone, industrial competitiveness, decentralization reform, etc., must be prepared.

Points of the Yabu City-Shinsengumi Proposal

 Yabu city was selected as one of the National Strategic Special Zones. The following is the outline of their plan.

 This proposal aims to build a new agricultural model in Japan with a tag-team of “municipal government eager to challenge regulatory reforms but lacking resources” and “farmer having capacity and ambitions but being annoyed by regulations”

1.　Scheme

 Yabu City (26,000 population), a depopulating municipality located in northern Hyogo prefecture and Shinsengumi Co., experimenting new agricultural business in Atsumi peninsula, Aichi prefecture, cooperate with each other in challenging a new type of agriculture.
 In Yabu City, so-called abandoned-farmlands dominate 10% of all the farmlands. Hence, it plans to transform these abandoned farmlands into productive lands by applying the National Strategic Special Zones Law.
At the same time, it aims to enable capable corporations such as Shinsengumi Co. to establish new agricultural corporations by cooperating with on-site farmers in Yabu City to advance production and processing of agricultural goods in a more community-based manner.
 Furthermore, we promote transformation of agriculture into a“six-dimensional” industry by introducing “application of credit-security to loans from banks,” “management of hotel business at classic-style private houses,” “opening of farmers’ restaurants”
and other ideas in order to realize such aforementioned agricultural reforms.

2.　Expected consequences

 Yabu City and Shinsengumi Co. will transform vast areas of abandoned farmlands into productive farmlands through regional/virtual partnership and thereby contribute to establishment of a new model in Japan’s agriculture.
 It will only be a first step toward real structural reform of Japanese agriculture. This proposal will serve as the first opportunity in recovering Japan’s agriculture and local communities.

Bills related with Growth Strategy in the Ordinary Diet

* Written by Eiji HARA, PPPC President

 Among the so-called “three prongs” of the Abenomics, although the first arrow (monetary relaxation) and second arrow (fiscal policy) had certain positive effects on the economy since early 2013, the government has had difficulty with regard to the third arrow (growth strategy).

 The Cabinet’s Japan Revival Plan announced in last June caused disappointments both domestically and internationally for its inadequate efforts toward regulatory and structural reforms.

 At the time, there was an excuse that the ruling parties and Cabinet could not announce drastic reforms facing the July Upper House election. Nevertheless, unfortunately, there have been little moves toward accelerating reforms even after the Upper House election.

 The extraordinary session of the Diet in autumn was phrased as “Diet to implement growth strategy,” but in fact the special intelligence protection bill became the biggest political focal point of the Diet and bills related to growth strategy were left behind.

 There were scarce improvements on reforms of the so called bedrock regulations or tax reforms such as corporate tax reduction. Rather, there were enactments of such bills as regulations on internet sales of drugs and taxi businesses that actually enhanced regulations.

 Under such a circumstance, one of the few accomplishments was the enactment of the National Strategic Special Zones Law.

 Subsequently, in January of this year, Prime Minister Shinzo Abe announced at the World Economic Forum (Davos Convention) that “There(=in the Special Zones), over the next two years, no vested interests will remain immune from my drill.”

 While this Davos Promise deserves great attentions, a question here is whether the Cabinet could really realize it.

 So far, there have been no moves toward drilling through the vested interests in the ordinary Diet session at the beginning of the two years.

 For more, it is yet seen what sort of bills are to be submitted during this Diet session in relation to the growth strategy. Further, preparations toward regulatory reforms are particularly slow.

 From the viewpoint of growth strategy, of particular importance are the reforms of university governance and corporate governance.

 Taking into consideration the low profitability of Japanese companies and low international reputation of Japanese universities, it is vital to introduce a new management regime that reflects external perspectives (e.g., external board members, reforms of presidential

elections in universities).

 On these issues, while certain considerations have been given in the government (the Cabinet did propose a bill to reform the company act last autumn, indeed), the contents of the bill were not necessarily satisfactory; for example, the bill did not entail plans to make it compulsory to private companies to have external board-members. And reforms on university governance require further considerations.

I will give up on Japan unless the government designates us as National Special Strategic Zone!

*This is a translation of an article published on the website of Tokyo Press Club.


Toward selection of the National Strategic Special Zones scheduled in March, hearings of candidate municipalities for the final selection have been held since last week. Although the hearings are not opened in public, stakeout activities at the door of meeting place would provide us of many hints of surprising alliance or “unique tag-team” formed at this final stage.

One exceptional case was that a famous “fighting farmer” Mr. Shigeaki Okamoto, CEO of Shinsengumi Co., showed up from the meeting place even though the hearings should be targeting at local governments. Moreover, Mr. Okamoto was accompanying the mayor of Yabu City, located in northern part of Hyogo Prefecture, not his hometown Aichi, and Tottori University Professor Nagaharu Mitsuta.
(February 17 18:25 at the door of Nagata-cho Joint Bldg.)


Interview at the door of Nagata-cho Joint Nldg.


Excerpts of the interview:

1:08-
Okamoto: 60% of Japan’s agriculture is in a similar situation with Yabu City (in which it is difficult to conduct large-scale agricultural management). And, Mayor Hirose of Yabu City is announcing that he will abolish regulations with regard to agriculture with his own initiative. No such courageous mayor can be found throughout the country.

Mitsuta: (Mayor Hirose) may change the history.

Okamoto: it is difficult to initiate such a proposition as there are pressures from everywhere. The officials of my hometown have deaf ears on such proposals, too. That’s why I will give my every effort to Yabu City. If it passes the selection it will make a good model case that can be applied everywhere in this country. The current state is that we cannot even make a start because of the regulations.

(abridged)

2:34-
Okamoto: The officials of my hometown are no more than that. But the Mayor of Yabu City made a big decision. This is really it (shaking hands)! I finally met a mayor with whom I could share my view!

(abridged)

5:22-
Okamoto: If it doesn’t pass (selection of the National Strategic Special Zones) and the government states it will only be applied in low-cost, large-scale agricultural areas, let me speak frankly, I will give up on this country!
I would like to protect Japan. I would like to develop this country. Although I have repeatedly spoken as slogan that potatoes made by nameless grandmothers will make dollars, there will be no hope or dream of this country’s agricultural policy if the idea is to be applied to imaginary, large-scale agriculture alone. It will inevitably meet with failure, fin... Let me speak once again, small-sized municipalities like Yabu City do deserve being qualified (as National Strategic Special Zones)!

Mayor Hirose: What the government is standing for is people living in the areas and legislative frameworks should be meant to let people have prosperous lives and to stimulate economic vitalization. It is all peculiar that the government designs uniform frameworks and say “you cannot do it”. All we are saying is please let us give operation of the legal framework in the best suitable way for Yabu City. And if the central government says no to such a proposition, we cannot stop worrying about future of the country’s agriculture. What will happen to local areas and the whole country? I feel depressed when I think of such possibilities.

Selection of National Strategic Special Zones

 Toward designation of the National Strategic Special Zones in March,
this week, the government has entered the final selection-process of
holding hearings from local governments.

 The way of selection, according to the “basic guideline” or Prime
Minister Abe’s speech in the Budget Committee, is to be categorized
into the following patterns;
1.Regional urban areas
2.Virtual zones (geographically-unconnected regions will be
  comprehensively designated)
http://www.kantei.go.jp/jp/singi/tiiki/kokusentoc/dai2/siryo2.pdf

And it seems that
・Tokyo Metropolitan or Kansai areas will be designated as the former
  type
・But an image of the latter-type is not necessarily clarified at this
  moment

 Toward final stage of selection, it is said that municipalities
previously acting individually started groping ways of cooperating
with each other or with private companies in different regions in
order to be qualified behind the scenes.
 For example, it is reported that the Shinsengumi co., known as a
new-style agricultural company based in Aichi prefecture, attended
hearing of Yabu City, Hyogo Prefecture, as the City’s business
partner.
http://www.tokyopressclub.com/2014/02/blog-post_18.html

 Also, although Tokyo is one of the most probable candidates for the
Zones, it is important to see how the new Tokyo governor will take
leadership on this issue.
 At the same time, Osaka is regarded as another equally-probable
candidate for the Zones, but there remains an uncertainty caused by
the coming mayoral election scheduled in March

 In any case, the important point is to start efforts altogether as
soon as the selection of the Zones is to be finalized, as they may
change the country’s scenery all at once.

 Let us hope for prompt designs and appropriate designations.

On Proceeding of National Strategic Special Zone(January 7, 2014)

 First meeting of the newly established “National Strategic Special

Zone Advisory Council” was held on January 7, and its five private

sector members, including Heizo Takenaka, jointly submitted a proposal

paper at the meeting.

--------------

On Proceeding of National Strategic Special Zone(January 7, 2014)

Reiko Akiike

Tatsuo Hatta

Ken Sakamura

Masahiro Sakane

Heizo Takenaka

1.Reaffirmation of the Aim of the National Strategic Special Zone

  The chief aim of institutional design of National Strategic Special

  Zones is to realize an economic growth by breaking through

  the“bedrock regulations” to which adequate reforms could not be

  accomplished by the past attempts of special zones for structural

  reforms or comprehensive special zones, as well as to achieve

  drastic tax reforms which is an equally challenging task through a

  manner initiated by the Prime Minister. The “Special Zone” will

  serve as a breakthrough for that purpose (it is expected that

  ambitious people, corporations, and local governments will play

  major role to realize advance models overcoming the “bedrock

  regulations” and initiate the economic growth while gaining returns

  themselves).

2.Principles of Operation of National Strategic Special Zone and

  Management of Special Zone Advisory Council Meetings

　①thorough information disclosure

  ②sense of speed (close cooperation with Special Zone Working Group

    and regional committee, flexible management by utilizing of

    research committee by experts, etc.)

  ③promotion of competition among Special Zones (establishment of

    Plan-Do-Check-Act cycle, rescindment of Zones attaining inadequate

    success)

3.Issues to be Considered for the Moment

①Short-term challenges

  I.Designation of Zones

    Toward designation of Zones in March, the Working Group should

    swiftly start selection process taking into consideration the

    following elements as basic rules for selection.

    i.Selection of regions having “ripple effects” that could

      eventually lead to growth of Japanese economy through

      internationalization

   ii.Selection of “regions of actions” that could undertake reforms

     of the bedrock regulations decisively and steadily with a sense

     of speed(premised on an appropriate evaluation of “willingness

     and ability” of regions)

  iii.Subject of designation should be either of the following 2 types

　　　・“relatively broad designation” based on prefectural or

　　　　metropolitan scope

　　　・designation of “virtual zones” in certain fields

　　　　(zoning within certain field with explicit conditions)

　II.Launch of regional committee

　　・Following the designation of Zones in March, each zone should

　　　launch the regional committee as soon as in April

　　・Composition/membership should be as simple as to enable

　　　substantial discussions with the ministers (in addition to the

　　　minister-in-charge, the relevant ministers can participate the

　　　meetings). In particular, the membership requires high-rank

　　　delegate of private sector (well-known figure as promoter of the

　　　relevant special zones)

　III.Measures to be addressed in the next Diet session or thereafter

　　　(additional menu)

　　・The exceptional measures enacted in the last extraordinary Diet

　　　are no more than temporary initial menu, and it is predicted

　　　there will arise many challenges in implementing specific

　　　initiatives into practice in the future. Therefore, the Working

　　　Group should promptly review all the previous proposals and

　　　suggestions from the local governments and private companies and

　　　start advancing necessary coordination toward further

　　　legislative measures in the future Diet sessions including the

　　　next ordinary session with regard to the National Strategic

　　　Special Zone Act

　IV.Formulation of employment guideline

　　・The Working Group should immediately start discussions toward

　　　formulation of the employment guideline in March

②Setting of mid-term target in eye of 2020

・Discussions on mid-term targets should be taken place promptly in

  eye of 2020, including the Tokyo Olympic Games

・For beginning, it should be arranged that ways to break through the

  remaining bedrock regulations should be opened at least in the

  special zone in the following 2 years as intensive period

・Also, the special zone aims to conduct specific reforms within some

  boundaries of regional and business scope in a speedy manner, to

  review the result for further considerations, and to apply the

  achievements to national-level legislations. In this sense, the

  process and goal toward nationwide applications from the special

  zones should be clarified specifically

　(for example, a system to stimulate nationwide applications through

  competition of reforms among regions should be developed).

Toward Starting of National Strategic Special Zone

* Written by Eiji HARA, PPPC President

 The bill to establish the National Strategic Special Zones was

approved in the last extraordinary session of the Diet. Accordingly,

on December 20, there was an announcement of five private sector

members of the “Special Zone Advisory Council” including Heizo

TAKENAKA, Tatsuo HATTA and Ken SAKAMURA.

 The National Strategic Special Zone is a plan to conduct regulatory

reforms within some districts experimentally. There were similar

institutions of special zones in the past, however, for limitations

caused by intermediary clerical coordination by the government

ministries, they could hardly cut their way into highly regulated

fields often dubbed “bedrock.”

 The aim of new Special Zone is to serve as breakthrough toward these

fields. One of the mechanisms to ensure such implementation is the

“Headquarter of Special Zone” (legally “special zone committee”)

to be established in each Zone. The committee serves as “independent

mini-government” where comprised of the minister-in-charge, local

leader and private sector members gather. The committee directly

receives on-spot voices on needs of regulatory reform. Then the

minister-in-charge takes the needs to the abovementioned Special Zone

Advisory Council for consideration. There, the minister-in-charge of

Special Zone and the minister having jurisdiction of said regulation,

along with private sector members, will have discussions and the Prime

Minister will finally decide how to advance the issues. As such, it

was designed to bypass oppositions from “the iron triangle” (of

bureaucracy, politicians and industry) with the bureaucracy at its

core.

 The legislation enacted this time entailed “relaxation of bed space

regulation,” “clarification of employment conditions,” “lifting

ban on publicly-owned privately-managed schools,” “exceptional

measures on floor-area ratio restriction,” “relaxation of

requirements for establishing agricultural corporations,” etc., as

particular initial menu of regulatory reforms to be applied in the

Special Zones (further menu will be added by the above process). All

of them are the bedrock regulations which past administrations

attempted to tackle with and failed. While some media reported these

menu are small-scaled, they are just criticisms rooted from ignorance.

 The reason behind the fruitful advancement was that discussions on

the framework of the Special Zone Advisory Council took the lead in

substance. The unimaginably distinguished members including Taichi

SAKAIYA (special advisor to the Cabinet), TAKENAKA (chief in charge of

the Industrial Competitiveness Council) and HATTA (chairperson of the

National Strategic Special Zone Working Group) formed a de facto

“negotiation team” without leaving discussions on selection of

reform menu and on coordination process between ministries, and gained

the final decision at the Prime Minister’s office in a meeting with

Prime Minister Abe and relevant ministers.

 The next phase is how the leaders operate the institution. The

Cabinet will be tested whether and how they open the breakthrough with

the Advisory Council as its arena after January.

The Bill on the National Strategic Special Zones: Prime Minister Abe’ s statement in the Cabinet Committee, House of Representatives （November 20, 2013）

On November 20, the bill on the National Strategic Special Zones was approved in the Lower House Cabinet Committee.

During the meeting, discussions took place with the Prime Minister Abe’s attendance, and the Prime Minister made the following statements.

Q (Manabu MATSUDA, Japan Restoration Party): I understand that the Special Zones is one of the critical cards of the Abenomics. However, it seems that the entailed reform menus are rather dissatisfying in comparison to its highfalutin title “National Strategy.” I have a concern that it may bring about an impression that the administration cannot get away from the vested interests or framework designed by the bureaucracy after all. With this regard, could you give us some comments that would eradicate such a concern if you have any?

A (Prime Minister ABE): Generally speaking, things tend to be understood through certain images casted on. Such criticisms as it is just a small-scale reform which only deals with easier-to-handle issues are not applicable this time. Although I do not mean to praise myself, I do believe this is a drastic legislation.

The items on which we gained results this time are the ones which the past administrations could not tackle with for many years, or even decades. Many regulatory proposals had been made throughout these years, but they had always been rejected. It includes the ones that couldn’t be legislated or implemented even though they were approved by the Cabinet officially. In particular, specification of employment rules, relaxation of regulation over the number of beds in hospitals, and lifting ban on the privately-managed public schools are the ones of which many had spoken in favor under the Koizumi administration, but could not be accomplished. The relooking of the agricultural committee can be listed as another example. I believe this is indeed a drastic reform. And I will steadily release this message both domestic and abroad to promote right understandings on this effort.

Q (MATSUDA): In order for the growth strategy of Abenomics to succeed, I believe it requires major reforms of such scale as to reshuffle the existing “postwar system” of Japan drastically. While I believe it will inevitably confront the existing vested interests, what is the extent of your decisiveness and what kind of vested interests are you prepared to fight against in realizing this National Strategic Special Zones?

A (Prime Minister): In the process of policymaking this time, I had asked the panel members from the private sector to play the role of attackers, instead of leaving the discussion to the government ministries. And the final decision was made by political responsibility, including that of myself. The strongly-composed team led by the chairman Tatsuo HATTA of the Special Zones Working Group took the initiative to select the subject reform items and even in the actual negotiation with the relevant government ministries. On these foots, and because I myself have given the final say, we were able to reach at this epochal achievement.

I believe that there is no end to regulatory or institutional reforms under my administration. I will continue to take the leadership to push forward such reforms in the field of medical care, employment, education, agriculture, etc., to turn Japan into a country where “the companies want to succeed the most in the world.”

Q (Toshiaki, OOKUMA, Your Party): I’ll ask on the Prime Minister’s understanding on the nature of the National Strategic Special Zones. Is this a new design to heighten freedom of business activities? Or, is it that the national government enters the field of business and starts a national project led by the national government? What is your understanding?

A (Prime Minister): The main player of the Special Zones is the private sector. We will implement regulatory reforms and other measures comprehensively and concretely to make an environment in which private, business operators to operate their businesses easily. It aims at promoting the private vitality by setting the surrounding in which it is easiest in the world to do business. Therefore, I believe that the private operators should play the role of promoting the business and investment, and the role of national government should be to set the environmental surrounding as such through regulatory reforms and other measures.

Q (Noriaki SASAKI, Japan Communist Party): You have said in the plenary session on November 8 that “with regard to drafting of the guideline on employment, we will not entrust the government ministries but elaborate it upon hearing experts’ views in the Council on Special Zones.” How are the things changing due to the guideline on employment? Also, do you mean that sketching of the guideline will be finally conducted u the responsibility of the Council on Special Zones, not the Ministry of Health, Labor and Welfare? Could you clarify on this?

A (Prime Minister): I understand that the problem residing with the existing employment rule is NOT that it is too strict. It has been problematic because of its ambiguity, instead. Therefore, a prescription should be neither abolishment nor relaxation of the existing rules but to sketch a new specific employment guideline and to monitor if the employment contracts are in line with the guideline. Our stance has been consistent since the initial plan through the current bill proposed at this time.

While the responsibility of sketching the guideline is left to the whole government, we plan to elaborate it upon hearing the opinions of members of Council on Special Zones, instead of delegating it to the Ministry of Health, Labor and Welfare alone.

Furthermore, the consultation and/or advisory services based on the guideline will be implemented under supervision of the “Headquarter of Special Zone” comprised of members from the central government, local government and private sector in each Special Zones to ensure effective operation of the services, based on the needs of each local characteristics and originalities.