Special Zones for Structural Reform. Office for the Promotion of Special Zones for Structure Reform

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1 Special Zones A p r i l C a b i n e t S e c r e t a r i a t Office for Promotion of Special Structure

2 The Process of investigation concerning Special Zones 2002 April 24: At a meeting of Council on Economic and Fiscal Policy (CEFP), Minister of Economy, Trade and Industry, Takeo Hiranuma and four private-sector members of Council each proposed conception of Special. May 2: Concrete investigations on Special Regulatory initiated at Council for Regulatory s Working Group June 25: The Basic Politics for Economic and Fiscal Policy Management and 2002 was decided by Cabinet; included proposal that an organization to promote introduction of Special Zones and actualization of system reforms, should be established in Cabinet Secretariat. July 5 : The Office for Promotion of Special Zones was inaugurated within Cabinet Secretariat. July 23: The Council for Regulatory decided Interim Report on Prioritized Regulatory Plans for Economic Vitalization,which contains concept of Special Zones. July 26: The Headquarters for Promotion of Special Zones which has Prime Minister as its director, was inaugurated. August 30: The deadline for proposal part 1 on Special Zones ; 249 entities sent in 426 proposals. September 20: Basic policies for promotion of Special Zones were drawn up, (and decided by Headquarters). September 30: Yoshitada Konoike was inaugurated as Minister of State (Disaster Management, Special Zones ). October 11: The program for promotion of Special Zones was drawn up (and decided by Headquarters). December 18: The law on Special Zones was promulgated January 15: The deadline for proposal part 2 on Special Regulatory ; 412 entities sent in 651 proposals. January 24: Basic policies on Special Zones, based on Law, were decided by Cabinet. February 27: The policies of government on how to cope with proposal part 2 on Special were drawn up, and decided by Headquarters. March 18:The bill of amended law was decided by Cabinet. April 21:57 Special Zones were decided.

3 Objectives of Special Zones To stimulate Japanese economy, it is necessary to elicit private-sector vitality to maximum extent, and to expand private-sector business by implementing regulatory reforms. Regulatory reforms are not being implemented as planned in some sectors for a variety of reasons Introduction of Special Zones By setting up specified zones where regulatory exceptions are established in accordance with zones specific circumstances, based on voluntary plans proposed by municipal bodies, privatesector enterprises, etc., we promote structural reforms in area. By publicizing successful case examples of structural reforms in specified areas, regulatory reforms can be extended to whole country, and we can stimulate economy of Japan as a whole. Characteristics of area will be made clear. By encouraging cluster of industries in accordance with those characteristics, and by creating new industries, we can stimulate area s economy.

4 Key focus points of Special Zones Basic principles Stimulation through competition of wisdom and ingenuity Change concept to enable establishment of a system to encourage independent local areas to compete with each or and reby stimulate ir society and economy,instead of accepting for set model laid down in advance by government. Change concept that regulations should be enforced uniformly throughout Japan to concept that regulations can be set up in accordance with areas specific circumstances. Respecting spirit of self-help and independence Municipalities voluntarily carry out various counter measures to prevent adverse effects of introduction of regulatory exceptions,both inside and outside Special Zones. Conventional financial measures are not carried out.(combination with existing budget measures is allowed.) Key focus points A A wide wide range range of of regulations regulations is is targeted targeted to to maximum maximum possible possible extent extent Regulatory exceptions which can be carried out in Special Zones are clearly set forth in form of an extensive list, and municipalities choose from that list.(the list is to be updated periodically in response to proposals made by municipalities and private sector.) The The procedures procedures and and decision-making decision-making process process are are unified unified in in Cabinet Cabinet Nationwide Nationwide regulatory regulatory reforms reforms will will be be implemented implemented thorough thorough adequate adequate assessments assessments Regulatory exceptions carried out in Special Zones will be evaluated after a set period of time has elapsed. Regulatory reforms that should be implemented on a nationwide scale will be expanded based on this.

5 Basic framework of Law on Special Zones (promulgated on ) Basic policies on Special Zones (as decided by Cabinet) Significance and goals of promoting system for Special Zone Basic policies concerning measures, which need to be implemented Plans on measures that Government must carry out(programs) Ensure that a list of preferential measures (e.g.,laws,government decrees, ministerial ordinances, notifications,etc.) that may be implemented,will be drawn up. Introduction of exceptions to regulation If plan is approved, exceptions to regulation provided in this law and government/ministerial ordinances are to be introduced. MunicipalitiesDrawing up and submission of Plan for Special Zones It is possible to ask relevant ministries and agencies to provide legal interpretations of regulations concerning plan. The ministries asked to provide interpretations are obligated to reply to such requests. The private sector can make proposals to municipalities. (If se proposals are not accepted, a notification stating reasons,etc.,must be provided. ) (Content of plan) Scope of Special Zones Content of project;exceptions to regulation that are sought to be introduced Social and economic effects anticipated in area Ors Prime MinisterApproval of Plan for Special Zones The Prime Minister will decide wher to approve plan by studying its conformation to Basic Policies, its social and economic effects in area,etc. Introduction of exceptions to regulation will require consent of ministers of relevant administrative organs.(in determining need to implement exceptions to regulation,etc., judgment of municipalities will be respected most. If exceptions to regulation introduced by municipalities will introduce meet requirements, ministers of relevant administrative organs will,in principle,give ir consent.) Establishment of Headquarters for Promotion of Special Zones (with Prime Minister acting as director) Concentrated and integrated promotion of system for Special s, as well as comprehensive coordination within government

6 Overview of Basic policies on Special Zones Significance and goals of promoting structural reforms, etc. (Outlined in 2 and 3 ) Basic policies on measures which Government must implement to promote structural reforms,etc. Basic policies regarding promotion of Special Zones Proposals are to be received regularly from municipalities and private sector, and which are n to be added onto list of exceptions to regulation, so that list is improved. The exceptions to regulation implemented in Special Zones are to be assessed after a set period of time. The achievements in Special Zones should be steadily extended to whole country. No restriction or than those provided by Basic policies on Special Zones can be added through notification, etc., on each exception to regulation. Basic policies regarding evaluation of exceptions to regulation implemented in Special Zones Evaluations must be made from following two perspectives by Evaluation Committee (provisional title),which will be established within Headquarters for Promotion of Special Zones by end of FY2003, and will comprise of private-sector personnel,scholars and or third parties. Evaluations of how each exception to regulation in Special Zones should be classified Each exception to regulation implemented in Special Zones is to be evaluated and classified as one of following: Should be implemented nationwide Should continue to be implemented in Special Zones Implementation in Special Zones should be abolished or improved Evaluations of effects, influences, etc., of exceptions to regulation implemented in each Special Zone Evaluation wher exceptions to regulation are implemented appropriately in Special Zones, or wher effects are achieved at level outlined in Plan for Special Zones is to be carried out. Basic policies on operation of prior confirmation system on legal interpretation In principal ministers of relevant administrative organs should respond, eir in writing or by electronic means to municipalities, within 30 days, Basic policies concerning complaints, consultations, etc., for local municipalities, private-sector enterprises, etc. The window will be established in Cabinet Secretariat to handle complaints, etc.,of municipalities, private-sector enterprises, etc.

7 Basic matters concerning approval of Plan of Special Zones Basic policies concerning approval of Plan for Special Zones If a plan for Special Zones drawn up by a municipality conforms to subject provided by Basic policies on Special Zones, n plan must be approved. No restriction must be laid down on number of plans approved. Subjects that are indispensable in drawing up Plan for Special Zones Exceptions to regulation should comply with matters provided by laws. Exceptions to regulation which will be implemented should be indispensable for achieving goals of local municipality. The scope of plan should be appropriate in light of content of project that municipality is planning to implement. Exceptions to regulation which are to implemented should conform to project that municipality is planning to implement. The plan should be based on proposals submitted by private-sector enterprises,etc.,and municipality should appropriately hear ideas of operating entities,etc. The standards for approving Special Zones The plan should suit to Basic policies on Special Zones. The content of plan should conform to significance and goals of promoting structural reforms, etc., provided by Basic policies on Special Zones. Matters mentioned in plan for Special Zones should meet above,. The social and economic effects,which are anticipated, should be explained quantitatively, in a detailed and rational manner, to maximum extent possible. The project should be expected to be implemented smoothly and surely. The entity indebted to exceptions to regulation should eir be specified or be highly likely to be specified. The schedule of project should be clear. Procedures for consent of ministers of relevant administrative organs Municipalities decide wher plan complies with matters provided by Content of exceptions to regulation implemented in Special Zones. The ministers of relevant administrative organs check wher exceptions to regulation being implemented in Special Zones conform to Basic policies on Special Zones, when y have Requirements for consent.the latter concerns only safety regulations and procedural confirmation. In or cases, ministers must consent to exceptions to regulation provided in Plan for Special Zones, except when se are clearly contrary to Content of exceptions to regulation implemented in Special Zone, provided by Basic policies on Special Zones.

8 Special Zones and proposal part on Special Regulatory ) Process of Application for approval of Plan for Special The Law on Special Zones is established Basic policies on Special was decided 24th Exceptions to regulation or than Law Receipt of for approval of plan for Special begins (Part 1) Receipt of for approval of plan for Special begins (Part 2) Receipt of for approval of plan for Special begins (Part 3) Exceptions to regulation are to be added periodically, in response to Proposal 2003 Special Zones No.1 was established on 21th April Apr Jun Jul Oct Nov Process of Proposal on exceptions to regulation Proposal part 2 on Special Zones The Headquarters for Promotion of Special Zones was opened 27 th February Negotiations are carried out between Cabinet Secretariat and each ministry Exceptions to regulation are to be added The bill of amended law was submitted to National Diet:18 th March) Proposal part 3 on Special Zones The Basic Policies are revised, and law is amended in case of necessity Negotiations are carried out between Cabinet Secretariat and each ministry Proposal part 4 on Special Zones