Shinzo Abe: Japan to set up special zones to boost growth

Govt looking at up to five areas with less red tape, fewer restrictions

Japan's Cabinet is set to endorse a Bill today aimed at setting up special zones where red tape will be loosened to promote business activities.

These "national strategic special zones" are a centrepiece of Prime Minister Shinzo Abe's growth strategy to revive the Japanese economy.

The Bill will be tabled in the current session of Parliament, which runs until Dec6.

As the ruling coalition now controls both Houses of Parliament, the chances of the Bill being passed are high, barring procedural delays that may be engineered by the opposition.

The government envisages the creation of three to five such special zones around the country, with the naming of Tokyo and Osaka - the two largest cities - almost a foregone conclusion.

Committees will be named later to draw up detailed reform plans for each zone.

The number of zones could increase in future.

Visiting professor Tatsuta Hatta, of Osaka University, who headed the working group determining the sectors for deregulation, told reporters last month that he hoped to see more zones, as "they act as triggers for growth".

Asked about the aim of the zones last month, Mr Abe told Parliament that he intended "to change the economic landscape and create an environment that will make Japan the easiest place in the world to do business".

But when it became evident that many proposed reforms were being watered down, the Yomiuri Shimbun urged the Prime Minister to "exercise leadership and boldly break down rock-solid and long-established regulations".

For instance, a suggestion to make it easier for companies to sack workers who breach rules agreed to beforehand between employer and employee was ditched. Companies can currently fire staff only under extreme conditions.

The labour ministry complained that making dismissal easier in the zones would upset the uniform application of labour laws throughout the country. The zones are now expected to set up guidelines only to prevent labour strife.

Some changes are, however, less controversial.

For Tokyo, rules are expected to be relaxed to enable the construction of taller apartment and office blocks to accommodate an expected influx of foreign workers in the run-up to the 2020 Olympics, which Tokyo will host.

To cater for these workers' medical care, restrictions will also be eased to allow more foreign doctors to practise.

To ward off further resistance from the bureaucracy, Mr Abe has decided to personally head a small committee to drive the implementation of the reforms. Ministers whose ministries are connected to proposed reforms will appear before the committee to present their views only if asked, but will otherwise have no voting rights.

The Cabinet is also due to approve a Bill today to set up a personnel bureau to help implement reforms.

It could be set up next April to manage the personnel affairs of senior bureaucrats, including appointments to some 600 senior government posts.

These appointments are now left, in principle, to each ministry or agency concerned and merely rubber-stamped by the Cabinet.

wengkin@sph.com.sg