2012/03/06

The 4th Proposal for Recovery from the Great East Japan Earthquake

Recovery of Tohoku and Continued Support Efforts Made by Kansai (Summary)

I. Introduction
About one year has passed since the Great East Japan Earthquake hit the Tohoku region. During this period, the Japanese government has taken a variety of actions including fiscal measures, establishment of Special Zones for Reconstruction, and the Reconstruction Agency. In spite of these efforts, reconstruction and recovery in the disaster-stricken areas has still only partly been completed. In fact, numerous unsolved problems are actually piling up and new challenges are being generated. To steadily proceed with reconstruction and recovery, additional measures should be taken to solve such problems to meet the needs of the afflicted areas.
Meanwhile, it is necessary to aim at creative recovery that will lead to a new type of economic growth in Japan, not merely reconstruction to return the afflicted areas to their original state, and thereby build a disaster-resistant country based on the experiences of the Great East Japan Earthquake.
On the basis of the results of interviews and experiences of the Great Hanshin-Awaji Earthquake, we at Kansai Economic Federation propose measures to be taken to recover the disaster-stricken areas as early as possible in a creative way and apply lessons learned from the disasters, as well as present our own efforts.

II. Proposals for Tohoku Region's Recovery

1. Recovery system
[Proposal] It is necessary to review the authority structure so that the Reconstruction Agency can function effectively.
To promptly push forward the recovery, it is necessary to review the authority structure so that the Reconstruction Agency can function effectively in an integrated manner. To this end, it is essential to utilize the right of recommendation and grant the Reconstruction Agency the right to execute recovery measures.

2. Recovery of and complementing administrative functions in municipal governments in afflicted areas
[Proposal] It is essential to provide necessary support to promote the dispatch of personnel from both the public and private sectors.
There is a strong concern about a possible future shortage of personnel, in particular, staff with professional experience and knowledge in the municipal governments of afflicted areas. To address this problem, the Japanese government should provide necessary support by encouraging the dispatch of public and private sector personnel including local government staff from non-disaster-afflicted areas.

3. Special Zones for Reconstruction
[Proposal] It is necessary to further clarify the scope of Special Zones for Reconstruction and recognize the requirements for such zones
It is necessary to take prompt action in easing regulations and providing preferential treatment by sufficiently incorporating the opinions of residents of afflicted areas and allowing them to take advantage of the Special Zones for Reconstruction. Accordingly, it is necessary to further clarify the scope of Special Zones for Reconstruction and recognition requirements for such zones.

4. Effective use of private funds and know-how (PFI-PPP)
[Proposal] It is necessary to strengthen PFI-PPP (Private Finance Initiative and Public Private Partnerships) in recovery
It is necessary to strengthen public-private collaboration in the recovery of disaster-stricken areas by utilizing PFI and PPP. The Japanese government should improve procedures to make it much easier for both the public and private sectors, and provide support in terms of finance and taxation.

5. Industrial and employment measures
(1) Agriculture
[Proposal] It is necessary to allow companies newly entering the agricultural field to acquire ownership of farmland.
To effectively use limited farmland and make agriculture in disaster-stricken areas even more competitive, it is necessary to allow companies newly entering the agricultural field to acquire ownership of farmland. At least the requirements for agricultural production corporations to enter the agricultural field should be eased.
[Proposal] It is necessary to ease regulations concerning establishment of agriculture-related facilities.
Requirements for permission for conversion of agricultural lands should be eased to make it possible to convert such lands to what is called sixth industry-related facilities and factories. Regulations for the establishment of factories should be eased.
(2) Fisheries industry
[Proposal] Transitional collaborations should be led to be continued efforts.
Transitional collaborations for reconstruction which are currently in place should be led to be continued efforts by providing initial investment and operational funds.
(3) Tourism
[Proposal] A long-term and large scale destination-specific campaign should be implemented with concerted efforts made by the national government, local governments and travel agents
To revitalize the tourism industry, the national and local governments and travel agents should jointly implement a long term and large scale destination-specific campaign.
(4) Employment
[Proposal] Requirements for employment period (three months or longer) of newly employed supervisor engineers should be relaxed.
Regarding construction works in disaster-stricken areas for reconstruction from the Great East Japan Earthquake, the requirements for the employment period of newly employed supervisor engineers under the Construction Industry Act and via administrative directions should be relaxed to less than three months.
(5) Disaster waste
[Proposal] Disaster waste disposal should be promoted
Aiming to reconstruct and recover disaster-stricken areas from the Great East Japan Earthquake as early as possible, it is a pressing issue to dispose of disaster waste promptly and properly. The national government and local governments throughout Japan should collaborate to promote wide-area disposal of disaster wastes.


III. Building disaster-resistant nation based on the lessons learned from the experience of the Great East Japan Earthquake

1. Creation of regulations to enable better emergency response to a large-scale disaster situations and clarification of operational guidelines
Although prompt establishment of governance for reconstruction and recovery of disaster-stricken areas was indispensable, it was 11 months after the disaster that the Reconstruction Agency was inaugurated. According to the results of interviews with the residents of disaster-stricken areas, some people indicated that although a governmental system was formed in the reconstruction and recovery phases, there were problems in terms of promptness and functions of such system due to problems generated from vertically divided functions between ministries and agencies.
Meanwhile, from the legal point of view, our country does not have any laws to define an emergency situation. Under the Disaster Countermeasures Basic Act, responses to disasters are controlled and orders are issued not by the national government alone, but by a bottom-up system where orders are issued first by municipalities, prefectures, and finally the national government (under the principle of subsidiarity). To comply with current disaster regulations, it is regarded that in principle a local government is responsible for protection of its residents' lives, bodies, and property. When it is impossible for a problem to be handled by a municipality, a prefecture will undertake it, and if a prefecture cannot do so, then the national government responds to it in accordance with the principle of subsidiarity.
Moreover, the Act contains few regulations in the phase of reconstruction and recovery from a disaster. Its purpose is only to restore the area to its original form, and is lacking in terms of the recovery phase. Based on the experience of the Great East Japan Earthquake, institution-building that enables recovery which is more than just "recover to the original form" is an issue to be addressed.
In addition, in assigning roles to the national and local governments, institution-building that clearly distinguishes between emergency situations and non-emergency situations is necessary. Meanwhile, review of the principle of subsidiarity in an emergency is also essential.
Furthermore, it is also important to clarify the guidelines on flexible operation of laws and regulations in case of an emergency during normal situations. For example, creation of regulations and guidelines in time of emergency, such as immediate release of gasoline in storage, etc., is indispensable for the general public as well as in developing business continuity plans that specify disaster responses.

2. Building a backup system of capital functions
The last great earthquake exposed the great risk of the over-concentration of capital functions in the Tokyo metropolitan area. Moreover, as it has been indicated that there is an increasing probability of an epicentral earthquake hitting the Tokyo metropolitan area, building a backup system of capital functions has become an urgent issue. With this situation in mind, the national government should urgently address initiatives to build a robust, safe and large disaster-resistant country. For the time being, discussions should be held to improve the security of Japan as a whole, by having the Kansai region assume a backup role for capital functions.
To this end, it is necessary to create a legal system concerning BCPs as an overall policy of the national government, and maintaining capital functions when a large-scale disaster hits the Tokyo metropolitan area. During these procedures, Kansai should be clearly designated as a backup area for capital functions.

IV. Continued support provided by Kansai
-"Acting as a bridge between Tohoku and Kansai for recovery" project-

1. System to provide continued support

• - Countermeasures Headquarters for Recovery from the Great East Japan Earthquake (Director: Mr. Tanabe, Managing Director & Secretary General) was established inside the Kansai Economic Federation as an information platform to act as a bridge between Tohoku and Kansai. By doing so, continued support will be provided for Tohoku's recovery.

2. Continue to grasp the current situation and special needs of disaster-stricken areas by fixed-point observation and information dissemination

• - To grasp the reconstruction situation and special needs of residents of disaster-stricken areas by sending volunteer buses, personnel, etc. and via fixed-point observation, disseminate information both inside and outside the Kansai Economic Federation, and thereby ensure that our member companies continue be aware of the situation in disaster-stricken areas.
• To examine concrete support for recovery that companies and economic organizations can provide by holding a symposium on support for recovery from the Great East Japan Earthquake.
• To send volunteers to disaster-stricken areas with the purpose of improved awareness of disaster preparedness, farming experience, etc.
• Fixed-point observation of disaster-stricken areas by personnel dispatched to such areas

3. Collaboration of universities and administrative bodies with West Japan Economic Council and Tohoku Economic Federation
(1)Periodical conferences with West Japan Economic Council
(2)Proposals and specific activities conducted in collaboration with universities in the Tohoku region　

• Kansai Economic Federation's endowed chairs will be established at universities in the Tohoku region and will provide lectures on entrepreneurship by CEOs of Kansai Economic Federation member companies

4.Promotion of industrial development, business matching and employment support
(1)Examination of a project contributing to industrial development and employment creation
(2)Promotion of business matching

• To continue to collaborate with the Tohoku region in terms of embedded system industries

(3) Promotion of employment support

• To build an effective business matching system to further support the employment of disaster victims

5. Continue and promote "Visit Tohoku, Buy Tohoku Products"project

• To collaborate with tourism promotion organizations in Tohoku and disseminate sightseeing information to member companies

V. Conclusion

On the occasion of the disaster, we face numerous challenges such as the rapidly aging population, and the necessity of transforming the agriculture and fisheries industries as if we are experiencing the future state of Japan, although the situations differ among the prefectures in the disaster-stricken areas.
The Great East Japan Earthquake caused catastrophic damage to industries in coastal areas of the Tohoku region which are symbolized by the agriculture and fisheries industries. As a result, the impact of the disaster, as well as the damage it caused, prompted the transformation of the industrial structure in disaster-stricken areas, which ordinarily would have been developed gradually through the medium to long term.
The Great East Japan Earthquake was absolutely devastating for residents in the disaster-stricken areas. However, successful achievement of creative recovery from the disaster may become a new growth model for Japan.
Kansai will request the national government to take necessary political action as well as continue to carry out support activities.

The 4th Proposal for Recovery from the Great East Japan Earthquake

2011/10/20

[The third Proposal for Recovery and Reconstruction from the Great East Japan Earthquake]

Proposal for Establishing a Backup System for the Central Functions of the Capital and Enhancing Kansai's Disaster Response Ability

The progress of recovery and reconstruction from the Great East Japan Earthquake has been delayed significantly.  As previously proposed, it is necessary to make great progress in the reconstruction and recovery projects in the afflicted areas with powerful government support as soon as humanly possible.  To that end, the early establishment and implementation of a third supplementary budget and building a systematic framework of special zone for reconstruction are strongly needed.
At the same time, based on the experience of the Great East Japan Earthquake, a review of the best way to maintain the central functions of the nation at the time of a large-scale disaster should be established as soon as possible, in addition to the promotion of measures for that purpose.  For the time being, however, the establishment of a backup system for the functions of Tokyo metropolis as a political, administrative and economic center is an urgent task as part of the nation's crisis management in preparation for a possible large-scale disaster in the future.  Since Kansai is an essential region in western Japan, it is considered to be a perfect area for this backup function.
Meanwhile, during a situation such as the Great East Japan Earthquake or in preparation for a large typhoon like the recent one that left behind a great amount of destruction in various regions including Kansai, it is also necessary to recheck and further strengthen Kansai's disaster response capability.  The Union of Kansai Governments is currently establishing a wide-area disaster prevention plan.  But in order to respond to a great disaster, including a possible earthquake that could inflict severe damage on the Tokai, Tonankai and Nankai regions, a joint effort by residents and companies is important in addition to the efforts made by the national and local governments.
As such, we make the following proposal regarding the establishment of a backup system for the central functions of Tokyo metropolis, as well as further strengthening Kansai's disaster response capability:

I. Establishing a backup system for the central functions of Tokyo metropolis and clarifying the role of Kansai
Kansai is located in a place distant enough from the Tokyo metropolitan area to be able to avoid simultaneous damage in a disaster, and has traffic, distribution and information communication infrastructures that connect various areas both overseas and within Japan, including the capital, as well as public facilities and functions, and conference halls and accommodations.  Also, Kansai, as the location of the consulates of major countries, local administrative organs of government and municipal agencies, and headquarters of many companies, as well as the backup functions for the Bank of Japan and some companies, is generally a perfect area that plays a backup role for the central functions of Tokyo metropolis.  Furthermore, the Union of Kansai Governments, which was established in December 2010, has shown its ability to achieve cooperation between local governments in successfully supporting disaster relief efforts.  Based on Kansai's potential as stated above, the establishment of a backup system for the central functions of Tokyo metropolis, including political and administrative functions and financial and information communication systems, should be built as soon as possible.
For that purpose, in addition to the early establishment of a legal system regarding the maintenance of the central functions of Tokyo metropolis during a large-scale disaster, Kansai should be clearly designated as an area that can play a backup role for the central functions of the capital.  After that, in order to set up a national-level business continuity plan through backup of the central functions of Tokyo metropolis, including the Diet, and the administration and judicial systems, we should have immediate discussions beyond the boundaries of government ministries.  In particular, since the initial response to a large-scale disaster is extremely important, the details of the initial response to a large-scale disaster beyond expectations in the Tokyo metropolitan area should be clearly specified in the business continuity plan, and a backup of the crisis center in the Prime Minister's official residence should be established in Kansai.
Also, from the perspective of risk management for a large-scale disaster, it is considered that companies should shift away from centralization in Tokyo in terms of their headquarters functions.

II. Enhancing Kansai's response capability for a large-scale disaster
To enhance Kansai's disaster response capability, it is important to come up with comprehensive response measures and to strengthen cooperation between the national and local governments and the private sector, or between various entities and fields related to land, sea and air management, transport, etc.  Based on the experience of major disasters such as the Great East Japan Earthquake, and to complete a backup of the central functions of Tokyo metropolis in Kansai, it is necessary to take certain measures, such as those stated specifically below.

1. Immediate implementation of damage prediction
Regarding emergencies and the size and broad spectrum of possible disasters in Kansai, strengthening the response to possible earthquakes in the Tokai, Tonankai and Nankai areas and in the Uemachi fault zone is an urgent agenda item.  Based on the unexpected size of the earthquake and tsunami that occurred in the Great East Japan Earthquake, we need to immediately re-predict the damage from those possible earthquakes.  In addition, local governments should be required to review their disaster prevention plans based on that damage re-prediction.

2. Multiple-lane development of traffic & distribution infrastructures, wide-area networking and establishing a backup system
After the Great East Japan Earthquake, comb-shaped emergency traffic networks were opened to secure access to the afflicted areas, in addition to roads, ports and railroads along the Japan Sea and airports near the afflicted areas being used as alternative routes.  Because of this, in order to strengthen Kansai's disaster response capability, it is indispensable for Kansai to realize a multiple-lane development of country trunk lines and traffic and distribution infrastructures, and wide-area networking ranging from the Pacific to the Japan Sea.  Also, from the experience of the recent typhoon, to secure relief routes in a time of disaster, it is necessary to enhance disaster prevention by having multiple road systems in mountainous areas, etc.
Moreover, based on the experience of the Great East Japan Earthquake, it is necessary to establish during normal times an emergency backup system for energy and power supply, and a disaster prevention administrative radio network that is resilient in a disaster.

3. Establishing a cooperative and collaborative system between land, sea and air traffic modes
Since the Great East Japan Earthquake, we have been aware of the importance of securing multiple wide-area alternative lanes for various transportation modes in an extensive disaster.  For a large-scale disaster, it is extremely important to establish laws & regulations and systems for emergency response in order to maintain emergency & rescue, recovery & rebuilding and economic activities by switching between land, sea and air transportation modes.  In the future, Kansai will be required to formulate preliminary plans related to transportation during a disaster through cooperation between various relevant bodies, such as facility managers, private businesses such as transportation, and local governments.

4. Cooperation between the government and private sectors and strengthening the disaster response of companies
The Union of Kansai Governments is currently establishing a wide-area disaster prevention plan.  But it is indispensable to clearly stipulate the response to a great disaster, including a possible earthquake that could inflict severe damage on the Tokai, Tonankai and Nankai regions, as well as the roles expected for companies in the disaster prevention plans of local governments.  Also, companies themselves are required to strengthen their disaster response, such as formulating and reviewing their business continuity plans and establishing an inter-company cooperative system for alternative production, etc. during a disaster.
In Kansai's business circles, we would like to conduct activities that contribute to strengthening disaster responses in cooperation with the government and private sectors and individual companies.  We hope to do this by requesting the cooperation of companies while at the same time reflecting on their views regarding the wide-area disaster prevention plan, through an exchange of opinions with the Union of Kansai Governments.

Proposal for Establishing a Backup System for the Central Functions of the Capital and Enhancing Kansai's Disaster Response Ability

2011/08/05

Urgent Proposal Regarding the Basic Guidelines for
Reconstruction after the Great East Japan Earthquake

It has been almost five months since the Great East Japan Earthquake hit the country. Amid political turmoil, the national government has finally forged the Basic Guidelines for Reconstruction after the Great East Japan Earthquake. It is noteworthy that this Basic Guidelines stipulates the establishment of a "reconstruction agency" and "systems of special zone for reconstruction," both of which the Kansai business community has appealed for establishment. Under the Basic Guidelines, it is henceforth necessary to implement timely and expeditiously a range of initiatives aimed at full-scale recovery, such as safe and secure urban/community development as well as economic revitalization for industrial promotion and employment expansion, and thereby firmly support the hope and will of earthquake survivors to restore their normal lives and reconstruct the areas devastated by the disaster.

In this respect, the Kansai business community strongly requests the national government as well as ruling and opposition parties to take the following actions on the basis of the Basic Guidelines:

1. Prompt establishment of the reconstruction agency, as a command and control center

Looking back to past experience of reconstruction and recovery after the Great Hanshin-Awaji Earthquake, there was a lack of command and control functions to coordinate and implement diverse measures involving the Cabinet Office and multiple ministries in a "one-stop" approach. As for the reconstruction agency proposed in the Basic Guidelines, it is still uncertain whether it would be able to serve as a genuine center for command and control in reconstruction efforts.

The national government must promptly submit a bill to establish the reconstruction agency, a bill that should clearly state that pertinent authorities and budgets of the Cabinet Office and multiple ministries be concentrated to the new agency, and that accordingly the agency be responsible, in a unified manner, for planning and implementation of reconstruction measures. In addition, this new agency must be headquartered in the disaster-hit Tohoku region so that the agency can closely watch the real situations of afflicted areas and intensify cooperation with local governments.

2. Restoration and supplementation of administrative functions of damaged municipalities

Generally, in disaster-stricken areas, it should be the local municipalities (cities, towns and villages) that play leading roles in promoting locally specific reconstruction projects and in formulating and implementing recovery plans, since municipal governments are best capable of closely serving local residents. However, in the case of the Great East Japan Earthquake, substantial damage was also inflicted on a number of municipal governments, when they should have been the primary leader of reconstruction efforts. The insufficient number of municipal personnel who would normally have been working for local residents has considerably impeded administrative functions. To perform reconstruction and recovery work in an expeditious and timely manner, it is essential to promptly restore and supplement the administrative functions of afflicted municipalities. Currently, numerous local government workers have been dispatched to the disaster-hit Tohoku region from a number of municipalities throughout the nation, including those from member prefectures of the Union of Kansai Governments, which employs a "counterpart scheme," wherein a team of specific member prefectures assists a pre-assigned prefecture in Tohoku. Under this situation, the national government is requested to provide necessary support to facilitate dispatching human resources (e.g. financial support to cover expenses for dispatch) widely from the public and private sectors, including retired personnel of municipal governments.

3. Prompt implementation of the compiled budget, early compilation of the third supplementary budget, and securing of funds for reconstruction

In response to the catastrophic disaster in Tohoku, two supplementary budgets totaling six trillion yen have already been formulated. However, given the scale of damage far greater than that of the Great Hanshin-Awaji Earthquake, an extra budget equivalent to 17 trillion yen is likely to be necessary.

In consideration of this necessity, in addition to the expeditious implementation of reconstruction projects covered by the first and second supplementary budgets, the national government and ruling and opposition parties must make concerted efforts to promptly compile a large-scale third supplementary budget, so that disaster-hit municipalities can proceed to give specific shape to full-scale reconstruction plans, without feeling uncertain about the viability of these plans.

Regarding compilation of the third supplementary budget, measures must be taken to ensure budget execution that can flexibly and responsively accommodate specific needs of disaster-afflicted areas. To this end, it is required to introduce grants-in-aid that local governments would be able to flexibly use for a wider range of purposes, as well as to establish a government-sponsored "recovery fund" in combination with private funds, as previously proposed by the Kansai business community.

Meanwhile, it should be noted that the current recovery projects must be promoted in parallel with the ongoing efforts to regain fiscal health. Therefore, it is imperative that the national government propose a convincing plan that would avoid non-essential issuance of deficit-financing bonds, while incorporating drastic reduction in government spending and the effective use of private funds. Our standpoint regarding tax measures for securing recovery funds is as set forth in our proposal announced this past June, "The Second Proposal for Recovery from the Great East Japan Earthquake - Prompt establishment of recovery plans and basic policies for securing funds for recovery." As stated in this Second Proposal, the national government must introduce a "recovery assistance tax" (tentative name), with the viewpoint of mutual assistance that the burden for recovery should be borne widely by the public. Regarding the introduction of this new tax, it would be reasonable to raise the consumption tax rate for a certain period of time as a temporary measure; provided, however, that specific measures are also taken to mitigate financial burdens incurred by residents in disaster-stricken areas.

4. Early stabilization of the power supply

It is critically important that the Tohoku region's reconstruction and recovery be supported by nationwide efforts. The Kansai region, in particular, has played a significant role in underpinning Japan's overall economy since the earthquake hit. However, at this crucial point in time when the entire nation needs to revitalize its economy to gear up for further development, the problem of power shortages has arisen, potentially hampering future recovery efforts.

Obviously, ensuring safety is the top priority in operating nuclear power plants. However, if resumption of plant operations is postponed even after the regular inspections currently under way, then the nation is likely to suffer a more serious power shortage.

Power supply constitutes fundamental infrastructure essential to supporting social and industrial activities, and accordingly, any instability in the power supply would inevitably make a direct and significant impact on daily lives and economic activities across the nation. It would be no exaggeration to say that ensuring stable power supply is one of the most critical requirements for preventing the hollowing out of domestic industries.

The national government therefore must make every possible effort to maintain stable power supply, by ensuring prompt resumption of nuclear power plants after completion of regular inspections, while obtaining understanding and agreement from local governments in a responsible manner.

Kansai Economic Federation
Kansai Association of Corporate Executives

Urgent Proposal Regarding the Basic Guidelines for　Reconstruction after the Great East Japan Earthquake

2011/06/16

The Kansai Business Community submitted the Second Proposal for Recovery from the Great East Japan Earthquake
- Prompt establishment of recovery plans and basic policies
for securing funds for recovery -

Based on the principle that reconstruction areas hit by the Great East Japan Earthquake and tsunami requires nationwide support, the Kansai business community publicized and submitted its first proposal for early recovery and reconstruction of the disaster-afflicted areas as well as for Japan's economic recovery to the national government on April 26. Since then, the Kansai business community has been working on a variety of support projects in coordination with the Tohoku business community.

On May 2, the Diet enacted the first supplementary budget for post-disaster restoration work. However, the national government faces a mountain of issues that must be urgently dealt with, such as livelihood support for disaster survivors, rubble removal, employment support, support for immediate resumption of business operations, as well as countermeasures against damage caused by the nuclear disaster and by unsubstantiated rumors about radioactive contamination. Therefore, the government must promptly compile the second supplementary budget and implement additional spending accordingly, on an as-needed basis.

The national government must also develop specific mid- and long-term measures for full-scale recovery in areas such as community development and industrial promotion. At the same time, the government must strongly support disaster-afflicted local governments so that they can promptly establish their recovery plans in order to keep disaster survivors motivated and willing to return to normal.

To deal with urgent issues and implement mid- and long-term measures for recovery, securing adequate funds is an unavoidable issue. The Reconstruction Design Council in Response to the Great East Japan Earthquake, organized by the national government, has discussed this issue and will soon present a basic direction for securing funds for recovery. The Kansai business community therefore proposes the following regarding development of specific measures for securing funds for recovery.

1. Basic policies for securing funds for recovery

(1) Prompt establishment of recovery plans

Considering the scale of damage by the recent disaster, full-scale recovery is expected to require far greater government spending than was required after the Great Hanshin-Awaji Earthquake. However, the first priority is not to secure funds for recovery. It is to promptly establish long-term recovery plans that will lead to creative recovery, or value-added recovery, and clarify the purposes for securing funds and how they will be used. The national government must develop recovery policies and a variety of support measures in a timely manner and firmly support the afflicted local governments when they establish their recovery plans.

(2) Securing funds for recovery without compromising mid- and long-term policies for regaining financial health

Although the national government needs to secure substantial financial resources for post-disaster recovery, it must not simply depend on issuance of additional national bonds because of the nation's critical financial condition. If and when the government issues additional national bonds, it must gain public understanding, secure a source of revenue to redeem the bonds and still pursue mid- and long-term policies for regaining financial health.

2. Measures to secure funds for recovery

(1) Thorough review of overall government spending

When securing funds for recovery, the government must thoroughly review its overall spending, including that used for measures included in the manifesto of the ruling Democratic Party of Japan, such as the Child Allowance program, and make utmost efforts to slash spending to secure funds for recovery.

(2) Use of technologies, management expertise, and funds from the private sector

When implementing recovery projects, the national government must make the most of technologies and management expertise from the private sector. The national government must also use private funds extensively to reduce spending by itself and local governments.

To that end, for recovery projects that are expected to generate positive cash flow in the future, but are subject to risks that cannot be borne solely by the private sector, there need to be some measures to attract technologies, management expertise and funds from the private sector. For example, the government must consider the possibility of attracting funds from the private sector, such as institutional investors at home and abroad, by establishing a government-sponsored "post-disaster recovery fund" (tentative name) and issuing "post-disaster recovery fund bonds" (tentative name) with a government guarantee and an interest income tax break. The government then must use the "post-disaster recovery fund" to strengthen competitiveness of the agricultural and fishing industries through expansion of scale and ensure that infrastructure be reconstructed, operated and managed under a concession scheme stipulated in the revised PFI (Private Finance Initiative) Law.

(3) Issuance of "recovery bonds" and introduction of "recovery tax"

If public spending is still needed to finance recovery efforts even after the national government makes utmost efforts to cut spending, it would be appropriate for the government to issue "recovery bonds" (tentative name). Unlike with other types of bonds, the funds received from the sale of "recovery bonds" must be used only for specified purposes. When issuing "recovery bonds," it would be also appropriate for the national government to introduce a "recovery tax," the burden of which would be borne widely and thinly by the public, in order to secure a source of repayment for the bonds. The "recovery tax" must be a temporary measure that will last until the redemption of the bonds. To gain trust in the "recovery bonds" and "recovery tax" from the public and the market, the national government must demonstrate its commitment to maintain fiscal discipline by establishing separate accounts for both revenues and expenditures related to post-disaster recovery. To determine when to introduce the "recovery tax," the government must consider and assess how much the Japanese economy, severely hit by the disaster, has recovered and picked up.

The basic principles of the "recovery tax" are that its burden be borne widely by the public and that its impact on the economy be minimized. Considering these principles, it would be most reasonable that the government will raise the consumption tax rate for a certain period on the condition that funds collected from the consumption tax must not be used to finance social security services. However, to support disaster-stricken taxpayers whose income level is below a predetermined threshold, the government needs to consider taking measures, such as refunding the consumption tax.

Kansai Economic Federation
Kansai Association of Corporate Executives

The Second Proposal for Recovery from the Great East Japan Earthquake - Prompt establishment of recovery plans and basic policies for securing funds for recovery -

2011/06/10

Urgent Proposal regarding Power Supply and Damage Caused by Unsubstantiated Rumors about Radioactive Contamination

Japan now faces its greatest national crisis since the Second World War in the aftermath of the Great East Japan Earthquake, and must be prepared to travel a long and hard road toward achieving reconstruction.  As far as corporate activities are concerned, many companies are currently seeing stagnant or declining production caused by disruptions to supply chains and are consequently moving their operations overseas.  To respond to these issues, specific measures must urgently be taken.

The Kansai business community is determined to make all-out efforts to contribute to the reconstruction of disaster-stricken areas in various ways, such as supporting the relocation of production and R&D operations as well as of hubs for the global market, thus strongly sustaining Japan's overall economy.

However, efforts to revitalize corporate activities are greatly hindered by a power supply shortage that is expected to become acute this summer, and by the spread of unsubstantiated rumors abroad concerning radioactive contamination.  The Kansai business community, therefore, requests the national government to take the following actions:

1. Resume operation of the nuclear power plants currently shut down for regular inspections after ensuring their safety

Improving the safety of nuclear power generation has become a major issue in the wake of the disaster at the Fukushima Daiichi Nuclear Power Plant.  Power companies must continue to take all possible measures to ensure safety and make utmost efforts to take further necessary actions.

To solve medium- to long-term power supply problems, there needs to be a deeper national debate about pertinent issues such as a review of Japan's overall energy policy.

While the power shortage in eastern Japan is a pressing short-term issue that needs to be addressed urgently, the power supply in western Japan is also likely to dwindle.

On May 9, Mr. Banri Kaieda, Minister of Economy, Trade and Industry, stated that there would be no safety problems with resuming the operation of the nuclear power plants currently shut down for regular inspections, except for the Hamaoka Nuclear Power Plant in Shizuoka Prefecture.  However, Fukui Prefecture and other local governments that host nuclear power plants still have not permitted the resumption of operations at plants currently shut down for regular inspections, claiming that they have not received an adequate explanation from the national government regarding the safety of the nuclear power plants that have undergone regular inspections.  This is causing great concern in terms of stable power supply in western Japan.

The national government is expected to take prompt actions to obtain understanding and agreement from the local governments so as to allow the nuclear power plants to resume operations.

Specifically, the national government is expected to assess whether the disaster at the Fukushima Daiichi Nuclear Power Plant was caused by the earthquake and/or the tsunami, and whether the aging of the power plant contributed to the disaster.  Based on such assessment, the national government is expected to provide safety standards for nuclear power plants.  Additionally, the national government is expected to explain why it requested Chubu Electric Power to suspend operations at the Hamaoka Nuclear Power Plant, clarify the position of nuclear power generation in Japan's overall energy policy, and meet the other requests of the local governments.

2. Take actions to prevent damage cased by unsubstantiated rumors concerning radioactive contamination

A spread of unsubstantiated rumors abroad concerning radioactive contamination has posed a major obstacle to exports of both food products and non-food products such as industrial products from Japan.  Exports from the Kansai region face the same situation. Under such circumstances, exporters in Japan are forced to shoulder a greater burden, such as measuring radiation.

Furthermore, there has been a sharp drop in numbers of overseas tourists since the disaster, and the decline in foreign students studying at universities and other institutions in Japan is showing no sign of halting.

To prevent damage caused by unsubstantiated rumors about radioactive contamination, it is essential to offer accurate information, such as radiation dosimetry data, widely and continuously.  The national government is expected to strenuously provide safety information for other nations and regions through media and diplomatic channels.

The national government is also expected to reduce the burden on companies by establishing a subsidy system to share the costs for radiation dosimetry, and creating a system promptly through which the national government issues certificates of non-contamination and safety for products made in Japan.


Kansai Economic Federation
Osaka Chamber of Commerce and Industry
Kyoto Chamber of Commerce and Industry
The Kobe Chamber of Commerce and Industry
Kansai Association of Corporate Executives

Urgent Proposal regarding Power Supply and Damage Caused by Unsubstantiated Rumors about Radioactive Contamination

2011/05/13

The West Japan Economic Council (Nishikeikyo) submitted the First Proposal for Recovery from the Great East Japan Earthquake

The Great East Japan Earthquake was much more catastrophic than the Great Hanshin-Awaji Earthquake in terms of both the scale and scope of damage. The disaster and a power shortage in eastern Japan due to a nuclear accident have had an impact on the Japanese economy as a whole. Japan now faces a momentous crisis; economic activity in eastern Japan is certain to remain stagnant for a considerably long time; and the functions of the Tokyo metropolitan area as a political, administrative and economic center in Japan will inevitably decline.

At a time like this, those of us in the business community in western Japan are determined to support the restoration and reconstruction efforts in disasterstricken areas, make up for eastern Japan's flagging economic activity and strongly sustain Japan's overall economy.

To that end, we will provide long-term support while ascertaining the needs of the afflicted localities. Moreover, to resolve the immediate issues, we have compiled our proposal as below. In this proposal we request the national government and relevant local governments to take all necessary measures.

1. Establishment of a strong implementation system
(1) Establishment of a command and control center, "Tohoku Recovery Authority" (tentative name), by the national government
The national government must establish a "Post-disaster Recovery Basic Act" directed at early reconstruction of the afflicted areas and regeneration of Japan. The government must also promptly establish a "Tohoku Recovery Authority" (tentative name), a command and control center with strong authority and broad responsibility, in line with the needs of the afflicted municipalities in the Tohoku region. This organization, to be headquartered in one of the afflicted localities, must recognize the requests and needs of all municipalities hit by the disaster, as well as take all necessary actions, such as implementing budgets and planning effective measures in a timely manner. In addition, to mobilize the efforts of all regions of Japan and ensure efficient and early recovery and reconstruction, we propose the establishment of an organization, such as "Western Japan Office, Tohoku Recovery Authority" (tentative name), that can serve as western Japan's primary contact for supporting the afflicted localities.

(2) Securing of financial resources for rebuilding without disrupting the process of regaining financial health
When securing financial resources for reconstruction, the national government must radically slash the budgets for nonessential projects and make all necessary efforts, without simply depending entirely on issuance of additional national bonds, because of the nation's critical financial condition. The government must strive to secure financial resources for rebuilding without disrupting the process of regaining financial health.

(3) Establishment of a one-on-one support scheme through which a nonafflicted local government directly supports an afflicted local government
In a case where a wide area suffers damage, as seen in the recent disaster, the national government should introduce a one-on-one support scheme through which a non-afflicted local government directly and responsibly supports an afflicted local government in its reconstruction. The government must vigorously promote implementation of this scheme through instruments such as legalization of certain fiscal measures.

2. Regaining control of Fukushima Daiichi Nuclear Power Plant accident as soon as possible
Efforts are now being made in various sectors to regain control of Fukushima Daiichi Nuclear Power Plant. We strongly urge all parties involved to continue to do their best to regain control of the power plant as early as possible and for the national government to provide accurate and easy-to-understand information on measures being taken to overcome the crisis at the power plant and their progress. The information should be provided in a timely manner, for distribution within Japan and overseas.

3. All necessary measures to be taken for western Japan to support the nation's economic activity
Those of us in western Japan must provide continuous reconstruction support for the afflicted areas and contribute economically as much as we can, such as by stimulating economic activity in western Japan as well as supporting and encouraging Japan's overall production and employment for the time being. In this regard, we request the national government and other relevant local governments to take all necessary measures, such as ensuring a stable power supply.

(1) The national government to provide supply-related information for western Japan to support Japan's overall economy
We request the national government to provide information on both eastern and western Japan's supply capacity and supply chain information for each product category and industry which has become available since the disaster. Specifically, we need information on the supply of necessary components, materials and other resources in order for western Japan to support Japan's overall economy.

(2) Provision of support for corporations based in western Japan to employ disaster survivors
We request the national government to offer subsidies to corporations based in western Japan ready to employ disaster survivors.

(3) Provision of support for corporations based in the Tohoku or Kanto region to relocate their operations temporarily to western Japan
We request the national government to offer tax incentives for relocation, allow flexible application of relevant laws and regulations such as the Factory Location Act and the City Planning Act, speed up necessary relocation procedures, and strengthen public financial support related to initial investment and operating costs. We also request the national government to ensure a stable power supply, a prerequisite for relocation of operations to western Japan.

(4) Provision of support related to procurement of components, materials and other resources and support for corporations afflicted by unsubstantiated rumors about radioactive contamination
We request the national government not only to support corporations directly hit by the disaster through financial measures such as tax incentives for recovery of damaged facilities, but also to provide equivalent support for corporations afflicted by inadequate supply of components, materials and other resources as well as by unsubstantiated rumors about radioactive contamination.

4. Strengthening efforts to maintain or restore the Japan "brand" image
We request the national government to provide accurate and easy-tounderstand information on the post-disaster recovery and reconstruction efforts and measures being taken to overcome the crisis at the nuclear power plant, and quell unsubstantiated rumors about radioactive contamination. The information should be provided in a consistent and timely manner for distribution both within Japan and overseas. Moreover, the national and local government must sweep away the post-disaster mood of self-restraint and create a lively atmosphere through measures such as promoting tourism and organizing a variety of events.

(1) Publicizing the safety of Japanese products
The national government must strengthen its system to prove the safety of Japanese products based on uniform standards for export items, and request the nations and regions imposing excessive regulations on Japanese products without regard to reasonable standards to promptly take corrective action.

(2) Encouraging overseas tourists to visit Japan
The national government must request the nations and regions overseas taking excessive measures, such as warning business and leisure tourists against traveling to all Japanese regions, to lift such measures promptly.

Western Japan Economic Council
Hokuriku Economic Federation
Chubu Economic Federation
Kansai Economic Federation
Chugoku Economic Federation
Shikoku Economic Federation
Kyushu Economic Federation

▶ The First Proposal for Recovery from the Great East Japan Earthquake (Nishikeikyo)

2011/04/26

The First Proposal for Recovery from the Great East Japan Earthquake - Aiming for the earliest possible restoration and reconstruction of the afflicted areas and Japan's economic recovery -

It has been more than one month since the devastating earthquake and tsunami hit northeastern Japan on March 11, 2011. The recent disaster was much more catastrophic than the Great Hanshin-Awaji Earthquake on January 17, 1995, in terms of both the scale and scope of damage, although local governments in the afflicted areas still cannot grasp the whole picture of the damage. The earthquake and tsunami were followed by a nuclear accident, which resulted in a power shortage in the Tokyo metropolitan area. The impacts from these series of events have spread throughout Japan's economy. Such impacts include: a decline in demand due to the prevailing negative sentiment among consumers; stagnant or declining production caused by disruptions to supply chains; and economic loss incurred by the agricultural and fishing industries as well as exporters of industrial products, and a sharp drop in overseas tourists due to unsubstantiated rumors about radioactive contamination.

Japan now faces its first major crisis in the post-Second World War era; economic activity in eastern Japan is certain to remain stagnant for a considerably long time; and the functions of the Tokyo metropolitan area as a political, administrative and economic center in Japan will inevitably decline. In a time like this, the Kansai region must utilize the fullest extent of its capacities, make use of its experience from the Great Hanshin-Awaji Earthquake to support restoration and reconstruction efforts, and strongly sustain Japan's overall economy.

The most urgent tasks are to help disaster survivors stabilize their lives as early as possible and help the disaster-afflicted areas restore their economic infrastructure. The national government must therefore promptly enact a supplementary budget for restoration work and establish a command and control center with strong authority and broad responsibility that will recognize the needs and concerns of all municipalities afflicted by the disaster and implement effective measures in a timely manner.

The reconstruction of afflicted areas requires bold and aggressive efforts unconstrained by precedents and existing systems. It also needs a reassessment of potential risks facing Japan. Based on such reassessment, a fundamental review of the location of Japan's political, administrative and economic functions and the entire national structure must be undertaken to demonstrate a new vision for Japan.

Based on the principle that reconstructing disaster-afflicted areas requires nationwide support, the Kansai business community will strive to promote seamless collaboration across western Japan, provide continuous reconstruction support, help promote Japan's quick economic recovery, which will assist reconstruction efforts, and help transform Japan's economic structure so that it can better respond to future disasters.

To resolve the immediate issues, we have compiled our first proposal, the outline of which is shown below. In this proposal, we request the national government and relevant local governments to take necessary measures and we express our intention to provide continuous support while ascertaining the wishes of the afflicted areas.

Outline of the First Proposal (The full text is available in Japanese.)

1. Budget spending and establishment of a strong implementation system

(1) Prompt enactment of the first supplementary budget by the national government
(2) Securing of financial resources for reconstruction without disrupting the process of regaining financial health
(3) Establishment of a strong implementation system by organizing a command and control center
(4) Establishment of a one-on-one support scheme through which a non-afflicted local government directly supports an afflicted local government

2. Regaining control of Fukushima Daiichi Nuclear Power Plant accident as early as possible

3. Strengthening reconstruction support and reinforcing efforts for Japan's quick economic recovery

(1) The Kansai business community's efforts to provide continuous reconstruction support
(2) Request for measures to be taken for western Japan to support the nation's economic activities
(3) Strengthening efforts to maintain or recover the image of the Japan "brand"

4. Developing "Strategies for Full Reconstruction of Afflicted Areas and Japan's Economic Regeneration" (tentative name) as early as possible

Kansai Economic Federation
Osaka Chamber of Commerce and Industry
Kyoto Chamber of Commerce and Industry
The Kobe Chamber of Commerce and Industry
Kansai Association of Corporate Executives

▶ The First Proposal for Recovery from the Great East Japan Earthquake (Outline in English)
(Full text in Japanese)

2011/04/25

The West Japan Economic Council (Nishikeikyo) has organized a "Nishikeikyo Team" for recovery assistance to the Great East Japan Earthquake

On April 8, The West Japan Economic Council (Nishikeikyo), which consists of six regions' (Kansai, Hokuriku, Chubu, Chugoku, Shikoku and Kyushu) economic federations, has organized a "Nishikeikyo Team" for recovery assistance to the Great East Japan Earthquake.

The Team will extend utmost support and cooperation not only toward immediate reconstruction of the afflicted areas of Tohoku and Kanto districts but also toward full-scale recovery of the eastern Japan.

For the present, as the collective will of Nishikeikyo, the Team will submit policy proposals to the relevant authorities on the measures that those of us in western Japan support Japan's economic activities, and work strongly to encourage the realization of these issues. Moreover, the Team will take effective actions for the recovery of the afflicted areas.

2011/04/25

Kankeiren has established a "Special Committee on Emergency Disaster Response and Support for the Great East Japan Earthquake"

On April 11, Kankeiren has established a "Special Committee on Emergency Disaster Response and Support for the Great East Japan Earthquake", headed by Mr. Kenichi Ando, Deputy President of Sumitomo Mitsui Banking Corporation. The Committee will work to conduct research studies and submit policy proposals to the relevant authorities as a collective will of the Kansai Business community, to contribute for the recovery assistance to those afflicted in the Great East Japan Earthquake.

2011/04/06

Kankeiren submitted an "Urgent Appeal" regarding reconstruction and support following the Tohoku-Pacific Ocean Earthquake

Support and recovery following the recent unprecedented catastrophe are expected to have ramifications beyond the difficulties and other issues faced by the localities directly affected. The Japanese economy and society as a whole must take the situation very seriously and direct all its strength toward post-disaster support and recovery. We strongly believe that this hardship must be overcome through mutual cooperation as a long-term nationwide movement.

Kankeiren reiterates its resolve to extend maximum support and cooperation not only toward immediate reconstruction and relief efforts but also toward medium to long-term full-scale recovery, in partnership with the Tohoku Economic Federation, Union of Kansai Governments and other relevant public and private bodies. At the same time, we urge the government to meet the following requests regarding immediate reconstruction and relief measures:

1. Swift adoption and implementation of the supplementary budget
Government measures pertaining to post-disaster support and recovery require implementation that is timely and appropriate to each phase. For the present, early adoption and implementation of the first supplementary budget for fiscal 2011 are necessary to restore daily living and economic infrastructure in stricken areas as quickly as possible. We think it important that the first supplementary budget take the following items into consideration:

(1) Support for early restoration of lifelines, including electricity, gas, water and communications

(2) Early construction of temporary housing

(3) Support for early recovery of medical, educational and welfare facilities

(4) Early restoration of transportation and logistics infrastructure, including roads, railways, seaports and airports

(5) Support for maintaining employment in afflicted areas, for example through accelerated application of employment adjustment subsidies

(6) Reinforcement of financial assistance for businesses in afflicted areas (issuance of emergency loans, etc.)

As for sources for the first supplementary budget, we feel the government needs to secure a total amount in the order of five trillion yen, by tapping economic-crisis and regional-revitalization reserves and also by freezing, in the light of the present emergency, expenditures pledged in the Manifesto (child allowance, individual-household income compensation program for farmers, trial of the toll-free expressway, etc.).

2. Swift implementation of countermeasures against negative effects on the nation's economic activities
The earthquake is affecting economic activities nationwide, as manifested in the drastic fall in stock prices, sharp rise of the yen, rise in gas prices, electricity supply shortages and the shortage of certain commodities as well as in other production and distribution functions. Unless the entire country stabilizes its production and supply capabilities and finance, the support needed for reconstructing and rebuilding afflicted areas may be disrupted. As such, we urge the government to swiftly consider and implement measures including those listed below, to counter negative influences on nationwide economic activities.
The government should also promptly establish a regime for powerfully propelling reconstruction planning, and present its roadmap without delay.

(1) Flexible application of pertinent laws
Corporations headquartered or located in afflicted areas should be able to continue necessary economic activities by applying relevant laws flexibly. Specifically, postponement of deadlines for formalities and reports under various corporate statutes (Companies Act, Financial Instruments and Exchange Act, etc.), and simplification of procedures for changing business hours under the Act on the Measures by Large-Scale Retail Stores for Preservation of Living Environment are high-impact measures calling for swift action. Corporate combinations (e.g. mergers) sought from the point of view of maintaining the nation's production and supply capacity, or assisting corporations struggling as a result of the disaster should also be granted swift reviews in consideration of their purposes.

(2) Financial stabilization
Since the earthquake and tsunami disaster is expected to have repercussions for the entire nation, financial stabilization will be crucial to corporations directly involved in reconstruction and recovery as well as corporations in various regions that are supporting such efforts. We ask the government to take the necessary action, including decisive steps, against excessive appreciation of the yen in coordination with monetary authorities in other countries. For the sake of financial stability, including stability of the stock market, again we ask the government for the early adoption of a first supplementary budget that includes the issuance of emergency loans, and appeal to the Bank of Japan to implement additional monetary easing steps.

(3) Securing supplies of daily necessities for afflicted areas
At this moment, priority should go towards securing supplies of daily necessities for afflicted areas. The government must take the initiative to this end, not only by utilizing national emergency stockpiles but also urging the business community to increase supplies of daily necessities so as to remove public anxiety. This should prevent excessive consumer hoarding and help secure daily necessities for those afflicted.

(4) Continuation and reinforcement of essential economic activities
Instead of reducing normal economic activities in reaction to the earthquake and tsunami disaster, corporations in Kansai and western Japan need to actively support the Japanese economy by, for instance, expanding production and employment as much as possible so as to help afflicted areas. The government should request corporations to take such actions and at the same time secure distribution routes to eastern Japan as well as transportation fuel, and implement tax, fiscal and financial measures to support capital investment and employment growth.

▶Kankeiren submitted an "Urgent Appeal" regarding reconstruction and support following the Tohoku-Pacific Ocean Earthquake (PDF)

2011/03/22

Chairman's message

Ten days have passed since the Tohoku-Pacific Ocean Earthquake. Numerous people are still missing in stricken areas, and in some locations there are not enough relief goods to go around. Once again, I would like to offer my heartfelt sympathies to everyone afflicted by the disaster and extend my assurances that Kansai will make our utmost efforts.

Daily news drives home the enormity of the damage suffered by the Tohoku and Kanto districts. Long-term disruptions to economic activities are feared not just in areas directly hit by the disaster but also throughout all of eastern Japan. Such a scenario could have repercussions far beyond Japan too, affecting countries in Asia and elsewhere around the world. As never before, those of us in Kansai must take the initiative and act boldly, with the determination to contribute to Japan's recovery and sustainable growth in this time of national crisis.

To get through this difficult time together, Kankeiren has asked our members to commit more efforts than ever into economic activities, to join in assisting eastern Japan, and thereby support Japan as a whole.

2011/03/18

Chairman's message

We would like to extend our heartfelt condolences to all victims and those afflicted in the earthquake and tsunami disaster, which hit the Tohoku district of Japan on March 11, 2011. 

This unprecedented disaster was a catastrophe not only to the directly afflicted areas, but to Japan as a whole.  The entire nation must therefore support the stricken areas.  We strongly believe that this hardship must be overcome through mutual cooperation in the nationwide scale.

Kankeiren, together with Kansai's local governments and related organizations, will combine our forces with utmost effort to support the disaster relief.

Kankeiren will respond to the emergency assistance for the Great East Japan Earthquake as follows:

1. Kankeiren has asked our members for their cooperation in disaster relief, including donation to Japan Platform (JPF). JPF is an international emergency humanitarian aid organization which offers effective and prompt emergency aid, focusing on the issues of natural disaster.

2. Kankeiren has organized a "Special Team" for emergency disaster response and support for the Great East Japan Earthquake in our secretariat (headed by Mr. Shinya Okuda, Senior Managing Director) on March 14. Kankeiren will take measures to contribute to the early reconstruction and recovery of the afflicted areas, in close cooperation with organizations such as the Tohoku Economic Federation and the Union of Kansai Governments.