Tuesday, October 1, 2013
EDITORIAL: To Reform, Abe Must Take On Vested Interests
TOKYO (Nikkei)--The government's Regulatory Reform Council, having issued its first report to Prime Minister Shinzo Abe in early June calling for changes in Japan's labor laws and other areas, has recently reconvened.
In its initial report, the council stopped short of addressing deeply entrenched regulations in such areas as agriculture and health care.
Abenomics, as the government's economic program has been dubbed, is a three-pronged effort at jump-starting Japan's economy. Of these, the government's growth strategy, particularly reforms aimed at cutting red tape, is the most important for guiding the economy to a stable recovery.
But deregulation necessarily involves confronting special-interest groups and the ministries and policymakers with ties to them. If the effort is to succeed, Prime Minister Abe and the Cabinet Office must give the council its full backing.
First Things First
The council will focus on three priority issues in its second report due out in June of next year: removing the ban on most "mixed medical care" that combines insured and uninsured treatments; leveling the playing field for social welfare businesses, including listed firms, in child care and nursing care; and relaxing rules on corporate ownership of farmland.
At the moment, the Health and Welfare Ministry allows mixed medical care on only some treatments. With rapid advances in medical technology, many patients want to take advantage of the latest treatments, even without insurance coverage, as long as those treatments are safe and effective. Therefore, the council should push to end the ban.
The council also needs to draw up reforms that enable corporations to run child care and nursing care facilities on public property, especially in land-scarce urban areas. In addition, the council should propose tax changes that equalize the treatment of for-profit companies and nonprofit social welfare organizations.
The Agriculture Ministry is drafting a bill aimed at expanding the scale of Japan's farms through consolidation of landholdings. Under the bill, intermediary management bodies will be created in each prefecture to combine unused farmland and lease it to companies. The ministry is planning to introduce the bill during the next Diet session.
This is a step in the right direction, but the ultimate goal should be to relax the rules and allow companies from other sectors to own farmland. At the same time, the council should move to overhaul agricultural cooperatives.
Taken For Ride
Despite the progress, there are worrisome developments elsewhere. Some lawmakers are trying to introduce new regulations or tighten rules that were eased previously. This is partly because politicians with close ties to special-interest groups are regaining influence due to the Liberal Democratic Party's overwhelming majority in the upper and lower houses of the Diet.
In January, the Supreme Court ruled an ordinance issued by the Health and Welfare Ministry restricting online sales of nonprescription drugs was unconstitutional. The prime minister followed up by declaring the lifting of the ban part of his growth strategy. Still, the ministry is fighting a rear-guard action, as it plans to introduce regulation that would prohibit the sale of 28 drugs online for several years.
In the meantime, the ruling coalition, comprising the LDP and New Komeito, will submit a bill to the next Diet session, together with the Democratic Party of Japan, that will tighten restrictions on the taxi business. The bill would, for a certain period, ban the entry of new taxi firms or any increase in the number of cabs in areas deemed to have enough cabs on the road. This is a transparent move by the industry to stifle competition that will deter new drivers from taking up the job. It sacrifices consumer convenience to protect incumbents and is therefore an unacceptable restraint on trade.
Oligopoly is rearing its ugly head in the legal profession as well. The Japan Federation of Bar Associations is adamantly opposed to increasing the number of lawyers in Japan, but the country needs more attorneys who can provide quality legal services to companies and individuals. The council needs to tackle this problem as well.
Another outstanding issue is whether to allow parcel delivery firms to handle mail, a business long monopolized by Japan Post Co. The government should allow the entry of firms that can deliver letters and parcels at reasonable prices while ensuring confidentiality.
The Regulatory Reform Council has a lot on its plate. Prime Minister Abe once said regulatory reform is the first and foremost priority of Abenomics. He needs to make that point again.
(The Nikkei, Sept. 30 morning edition)