Seeking Action of Regulatory Reform for the 21st Century
(Vice Chairman, Keidanren (Japan Federation of Economic Organizations) / Chairman, Committee on Administrative Reform /
Chairman of the Board, Sony Corporation)
Japan needs regulatory reform in order to create an economy and society appropriate
to the 21st Century
In the half century since World War II, Japan strove to reconstruct itself
and develop its economy. These were its national goals. In the last few years,
however, Japan's socio-economic structure has begun to experience systemic fatigue.
The fatigue has shown itself partly in the long-lasting economic stagnation, and
the major changes in the environment (e.g., the borderless economy and the accelerating
development of the telecommunication) are pressuring for the socio-economic system
to change. Regulations and rules should exist to help the nation realize its vision
and adapt to changing times. However, in the case of Japan, regulations which
does not match reality, or which outlive their usefulness, still tends to remains.
Many of them have become the treasures of vested interests. Some regulations date
back to the Meiji "modernization" period of Japanese history, or to
the period that lead to Japan's rapid economic growth. What is needed now is to
abolish regulations that are no longer necessary, and to create a new set of rules
that will help Japan renew itself for the 21st century. In order to ensure that
Japan continues to play an important role in international society, and to realize
the economic growth that enrich people's lives, we need to change our economic
structure and create a private-led society based on self-reliance and self-help.
For this purpose, we must continue, strengthen and accelerate regulatory reform
Regulatory reform shows steady progress
Government efforts at regulatory reform have gathered momentum in recent years.
The first three-year Deregulation Action Program started in fiscal year 1995 (April
1995-March 1996). This program was begun as a result of the report of the Economic
Reform Study Group (an advisory body to Prime Minister Morihiro Hosokawa) under
the chairmanship of Mr. Gaishi Hiraiwa, then chairman of Keidanren.
The Administrative Reform Committee, an independent body set up within the
Prime Minister's Office, has monitored the progress of action program implementation.
The committee has also coordinated varying opinions relating to additional tasks
that need to be addressed. The government has sought to improve the substance
of programs by revising them at the end of each fiscal year considering these
opinions as well as a wide range of perspectives on deregulation from other parties
both inside and outside Japan.
Keidanren has participated in preparing a framework to promote regulatory reform.
And it has made specific requests for reform to relevant government agencies.
These requests are based on an annual questionnaire answered by member companies
and organizations in an effort to ensure that the views and wishes of the business
sector are reflected in the Deregulation Action Programs.
Regulatory reform has been carried forward on the theme of "abolishing
economic regulations in principle and keeping social regulations to a minimum."
Progress has been seen over the course of the two three-year Deregulation Action
Programs (April 1995-March 1998 and April 1998-March 2001), due, mainly, to the
active efforts of the Regulatory Reform Committee (successor of the Administrative
Reform Committee). In particular, stronger competition -- resulting from the abolition
of regulations relating to market entry and plant and equipment, which were designed
to adjust supply and demand, and the relaxation of fee and price regulations --
has brought consumers various benefits in the areas of telecommunications, transport,
retail distribution, and many others. A wide range of new services, and lower
fees, fares, and prices has been introduced. At the same time, the scope of regulatory
reform has been expanded to include recruitment, labor, education, legal services,
and other fields where less progress in deregulation had been evident. This has
resulted in greater industrial competitiveness, the creation of new industries
and jobs, as well as other benefits.
Much still to be done
Nevertheless, there is still much to be done on the regulatory reform front,
particularly when it comes to addressing the problems accompanying institutional
Even though the theme of "abolishing economic regulations in principle"
has been introduced, typical economic regulation still can be seen in some areas
such as transport, customs clearance, retail distribution, and energy in spite
of repeated cabinet decisions to review the situation.
There are many regulations and systems that hinder our approach to the problems
presented by economic globalization and IT revolution. To take the IT revolution
as an example, the government is currently tackling the expansion of what can
be processed electronically under e-commerce (review of requirements concerning
document delivery, affixing signatures and seals, person-to-person explanation,
and so forth) and the implementation of "electronic government" through
the introduction of electronic application procedures for government approvals
and authorizations. However, it is equally important to rethink the application
procedures themselves. For example, an application for the creation of mining
rights requires as a supporting document a hand drawing of the sector boundaries
in Japanese ink or pigments on handmade Japanese paper. As long as such regulations
remain in force, even if electronic application procedures are introduced the
realization of electronic government in the true sense of the word will not occur.
Consequentially, Keidanren prepared a document in October 2000 urging "Resolute
Promotion of Regulatory Reforms and the Establishment of a New System for the
21st Century." In this we proposed that a new three-year Deregulation Action
Program should be adopted when the present program comes to an end in March 2001.
We also suggested that an authoritative body reporting directly to the prime minister
be formed to tackle a wide range of issues from the standpoint of institutional
reform of the economy and society.
Regulatory reform appropriate to the 21st century
The government approved an outline of administrative reform on December 1,
2000. This outline included the formulation of a new three-year Regulatory Reform
Action Program starting in fiscal year 2001, and the establishment of a new framework
to study and promote the implementation of regulatory reform. Specifically, it
was decided to formulate a new three-year action program by the end of fiscal
year 2000, taking into account the views of the Regulatory Reform Committee, the
New Action Plan of the Industrial Rebirth Council, the Basic IT Strategy of the
IT Strategy Council, as well as other views and requests from both inside and
outside Japan. Therefore Keidanren, for its part, will continue to lobby relevant
parties with a view to getting as many as possible of our October 2000 proposals
to the government-356 items in 16 sectors-to be adopted in the new three-year
The government will study the possibility of setting up a consultative body
within the new Cabinet Office. The body would promote wide-ranging regulatory
reform with structural reform of the country's economy and society in mind. It
would form a concrete plan by the end of fiscal year 2000, taking into consideration
the views of the Regulatory Reform Committee.
Keidanren intends to continue to watch the government's efforts at ensuring
a consultative organ to be set up as part of the institutional structure. This
organ, as a principally private-sector body, should be capable of putting forward
objective proposals, as recommended by the Regulatory Reform Committee. We must
also ensure that, from the point of view of structural socio-economic reform,
it will have the functionality to apply itself to the task of reviewing not only
individual regulations but also related systems.
The need for strong political leadership
It goes without saying that the determined implementation of regulatory, or
indeed any, reform requires strong political leadership. At this point of transition
to a new century, vigorous efforts are being made under the leadership of the
government and the heads of the governing parties to clarify the form that the
administration should take in the 21st century. We strongly hope that significant
results will be achieved.
At the same time, regulatory reform is not a matter for the government alone.
It is a task for industry. I believe that industry must rethink its attitude and
act on the basis of self-reliance, self-help, and responsibility for its actions.