Reform Schedule - Main Points (September 21, 2001)

1.Privatization /Regulatory Reform

1 Regulatory Reform

(1) Regulatory reform in public service fields such as health and welfare

- Implement to the greatest practicable extent the recommendations of the Interim Report on Regulatory Reform in Six Priority Areas from the Council for Regulatory Reform as soon as possible (see Appendix)

- Revise the Three-Year Program for Promoting Regulatory Reform by the end of the fiscal year, based on the recommendation which is to be made by the end of calendar year by the Council for Regulatory Reform on the issues that were left out of the Reform Schedule, new issues, and fields other than the six priority fields.
(To be enacted by March 2002)

(2) Regulatory Reform in IT Field

- Examine the technical and systemic issues related to private-sector utilization of optic fiber networks which are originally made for road and river management, and where necessary, amend and/or reinterpret relevant legislations (such as the Roads Act).
(To be enacted by March 2002)

- Based on IT installation work in existing apartment buildings, issue supplementary interpretations of the Division Ownership Act and formulate IT conversion standards for new apartment buildings.
(To be enacted by March 2002)

- Present a bill setting out the responsibilities of internet service providers and similar operators.
(Next extraordinary session of the Diet)

2 Review of Special Public Corporations

- Formulate a Restructuring and Streamlining Program for Semi-Governmental Corporations this year, and determine the program in the Cabinet.
Reach the conclusion on the abolition, and the division and privatization of four Highway Public Corporations, Urban Development Corporation, the Government Housing Loan, and Japan National Oil Corporation, in advance of other special public corporations.
(To be enacted by March 2002)

- Take the initiative on reform of special public corporations, based on guidelines from the Prime Minister; release plenty of information about the work of special public corporations and their finances, and carefully explain the benefits of reform.
(After October 2001)

- Conduct a thorough review of the administration and activities of special public corporations in order to reduce the fiscal expenditures on them.
(To be funded by budget for FY2002)

2.The "Support Challengers" Program

1 Encouraging new business start-ups

- Encourage university-based venture start-ups by employing university Technology Licensing Office (TLOs), providing entrepreneurs with relevant training, and providing financial assistance for joint research by involving the government, academic, and private sectors that is geared towards creating new industries. Similarly, expand financial support schemes in order to facilitate the procurement of funds by new business founders.
(To be funded by budget for FY2002)

- Encourage funding from private-sector financial institutions as collateral for money receivable debts at small and medium businesses by presenting an extraordinary session of the Diet with a proposal for amendments to the Small and Medium Business Credit Insurance Act designed to enable the Credit Guarantee Corporation to set up guarantee schemes.
 (Next extraordinary session of the Diet)

- Expand the safety-net guarantees from the Credit Guarantee Corporations and the safety-net grants from government financial institutions for small and medium businesses experiencing financial difficulties due to bankruptcy of a client or supplier or collapse of a major trading financial institution.
(To be enacted by March 2002)

- Amend the Commercial Law to encourage the utilization of the stock option scheme by widening the eligibility criteria, removing the upper limit on grants, simplifying the decision-making process of the company board and other ways.
(Next extraordinary session of the Diet)

- Implement competition policy resolutely and boost monitoring and regulation of markets by strengthening the Fair Trade.
(To be funded by budget for FY2002)

2 Radical Resolution of the Non-Performing Loans Problem

- Strengthen inspections of major banks to have a good grip of the status of non-performing loans (NPLs) by raising frequency of comprehensive inspections from every two years to annual basis as well as conducting follow-up inspections semi-annually.
 (To be enacted by the end of September)

- Conduct special inspections against major banks during the periods of their self-assessment of assets, mainly focusing on borrowers whose market reputations are remarkably changing. The purpose of this inspections is to secure accuracy of the borrower classification and sufficient level of write-offs and provisioning by banks according to borrowers' business performance and market signals on a timely basis. In implementing them, by collaborating with external auditors, appropriate accounting treatment will be done at the next accounting period.
(To be enacted by March 2002)

- The Development Bank of Japan (DBJ), the Resolution and Collection Corporation (RCC), together with private investors, are required to establish funds for corporate reconstruction or participate in this initiative. The funds will strive to realize reconstruction plans by purchasing stocks of those who have established rigorous restructuring plans and which banks have acquired through "debt equity swap".
(To be enacted by the end of September)

- The DIC (Deposit Insurance Corporation) and the RCC will continue to purchase NPLs intensively, with granted flexibility in deciding purchase prices, until the end of FY2003. In addition, the DIC and the RCC are to work on corporate reconstruction aggressively.
(By the end of FY2002)

3 Structural Reform of the Securities Market

(1) Promote the infrastructure of the securities market, where individual investors play the leading part.

- Publish all the administrative actions against violations of the action rules by securities companies.
(To be enacted by the end of September)

- Reinforce the organization and functions of Securities and Exchange Surveillance Commission.
(To be enacted by the end of September)

- Reduce the minimum unit for securities investment.
(To be enacted by the end of September)

- Promote the electronic issuance of the prospectus.
(To be enacted by the end of September)

- Review the contents of prospectus for investment trust.
(To be enacted by March 2002)

- Improve the homepage of the Financial Service Agency to encourage individual investors to have more faith in the securities  market.
(To be enacted by the end of September)

(2) Taxation for securities

- Review the securities tax system as soon as possible (Next extraordinary session of the Diet)

4 Judicial System Reform

- Promote the judicial system reform by setting up the Headquarters for Judicial System Reform (provisional name), formulating a reform program, and aiming to have the relevant bills adopted within three years.
(To be enacted by March 2002)

- Present a bill for amendments to the Corporate Reorganization Act (excludes Bankrupt Entities Act sections).
 (By the end of FY2002)

3.Strengthening Welfare and Insurance

1 Reform of social security systems

- Investigate the feasibility of a system similar to the "Individual Social Security Accounting" (tentative name) model used in many countries and a system of social security numbers, and develop plans for introducing them to make Japan a front-runner in the area of e-government.
 (To be enacted by March 2002)

- Ensure that social security systems guarantee basic, fair, and comprehensive security and improve administrative efficiency by conducting a systematic review of the pension, nursing care, health care, unemployment insurance, and other systems, focussing in particular on better division of labor between each systems, eliminating duplication of benefits, and making premium collection more efficient.
(After October 2001)

2 Reform of the health care system

- Develop a "Medical Services Efficiency-Boosting Program" (tentative name) outlined in the Basic Guidelines, for inclusion in a Ministry of Health and Welfare-Ministry of Labor proposal.
(To be enacted by the end of September)

- Set up IT-based health care services. (Trial the underlying health care (EBM) by setting up a database that provides both health care professionals and patients with the latest health care information via the internet or similar. Set up a health care insurance system based on electronic patient records. Trial on-line invoicing of receipts.)
(To be funded by budget for FY2002.)

3 Review of the pension system

- Clamp down non-payments (by providing more payment outlets, enabling payment by bank remittance, expanding automatic remittance procedures at post offices to the entire country, and making greater use of warning notices and telephone calls to encourage payment).
(To be funded by budget for FY 2002.)

- Conduct a detailed review of the pension system, focussing on the "future issues" identified in the "Basic Policies", including a review of the system design to explore possible changes of working styles and a review of pension taxation.
(After October 2001)

4 Nursing care

- Expand a nursing house facilities criteria to allow private-sector involvement and introduce schemes such as PFI where facilities are built by the public sector and operated by the private sector.
(Next extraordinary session of the diet)

- Develop a range of business models for the private-sector "Secure House Plan," a user-pays initiative targeted at middle-income earners under which private-sector assets are use to create facilities providing high-quality care services for elderly persons. Models include: facilities that double as day care centers for the elderly; facilities that utilize public housing; facilities quality rental housing for the elderly; and facilities that utilize privately owned land. (Models to be developed during FY2001; implementation to begin in FY2002.)
(To be enacted by March 2002)

4.oubling our Knowledge Stock

1 Human Capital Development

- Push forward with " The Education Reform Plan for the 21st Century" which includes revitalization of elementary and secondary education through promoting "The Plan of Fresh Schools".
(To be funded by budget for FY 2002.)

- Make academic courses at universities and graduate schools more effective by expanding the scope of course designation and introducing more flexible and prioritized course designation for benefits of education and training.
(To be enacted by the end of September)

- Investigate measures to boost scholarship schemes, and support self-help efforts for both undergraduate students and mature-age students.
(To be funded by budget for FY 2002.)

2 Nation Built upon a Platform of Scientific and Technological Creativity

- Where appropriate, the Science and Technology Council will lobby the authorities responsible for preparing the budget to provide a larger allocation towards research resources, particularly in the four priority areas of life sciences, information and communications, the environment, and nano-technology and materials. The Science and Technology Council will also liaise with the relevant ministries and agencies regarding their respective policies pertaining to "Promoting Science and Technology (particularly in the four priority areas)", and the relevant ministries and agencies shall request it. Project selection procedures will be improved by introducing external assessment and public disclosure of the selection results.
(To be funded by budget for FY 2002.)

- About the deregulation including clarification of the standard about the National Universities institution use of a university venture, or the National Universities instructor's non-officer subsidiary business, the conclusion will be obtained during FY2001.
(To be enacted by March 2002)

- Develop detailed policies on liaison between the government, academic, and private sectors, covering areas such as structural reform and deregulation. Regarding corporatization of national universities, release a reform direction paper and consider tax breaks and other measures to encourage private investment in private universities. Stage a summit meeting that brings together the government, academic, and private sectors, including universities and senior management from industry throughout the nation.
(To be enacted by March 2002)

3 Turning Japan into a Globally Advanced IT Nation

- Provide schools and libraries with high-speed internet connections together with the necessary peripherals of the IT environment.

(To be enacted by March 2002)

- Develop and trial cutting-edge technology as a means of portraying Japan to the Japanese public and the world at large as a world-leading IT nation.
(To be enacted during FY2002)

4 Creating Internationally Competitive Universities

- Facilitate the rapid corporatization of national universities by preparing a direction paper on the reform of national universities during FY2001 that includes aspects such as selection of non-government employee model, clarification of management duties and responsibilities, and introduction of private-sector management principles.
(To be enacted by March 2002)

- Introduce the principles of competition through third-party evaluation and encourage prioritized allocation of resources in order to cultivate a "Top 30" group of national, local, and private universities boasting internationally competitive world-class standards.
(To be funded by budget for FY 2002.)

5.Lifestyle Revolution

1 Promotion of employment measures

- Support reemployment by improving the system of an extended training benefit.
(Next extraordinary session of the Diet.)

- Utilize private sector and other organizations to help promote effective job training for unemployed middle-aged white collar workers.
(Next extraordinary session of the Diet.)

- Create employment based on the local needs.
 Set aside funds to swiftly provide temporary employment in the public sector for workers including as assistant teachers etc.
(Next extraordinary session of the Diet.)

- Establish special measures relating to temporary staff (extending the period that middle-aged to senior temporary workers may be employed from one year to three).
(Next extraordinary session of the Diet.)

- Strengthen the career advisory capacity of public and private sector through the nurturing of more career counselors.
(Next extraordinary session of the Diet.)

- Conduct empirical tests to try to facilitate a transport service which will help cater for the various essentials of everyday life. (By the end of year 2002.)
(To be funded by budget for FY 2002.)

2 Helping to raise children

- Promote a policy aimed at eliminating waiting times for children to enter day nurseries.
(To be funded by budget for FY 2002.)

- Urgently promote the provision of day nursery facilities with the aid of PFI (Private Finance Initiatives) and by involving the private sector into public facilities.
 (Next extraordinary session of the Diet.)

- Attempt to provide a network of child-care facilities operated and paid for by the private sector.
(To be enacted by March 2002.)

- Urgently promote the establishment of Child Clubs for after-school hours.
 (Next extraordinary session of the Diet.)

3 Establishment of the recycling society

- Make the necessary preparations for the implementation of the Kyoto Protocol, and support a society which does not contribute to global warming by encouraging the development of a national movement to meet this aim.
(To be funded by budget for FY 2002.)

-Consider market-based instrument of tradable permit systems, and environmentally-related taxes and charges to implement the Kyoto Protocol.
(To be enacted by March 2002.)

- Encourage cooperation between business, citizens and NPOs in order to help build the recycling society. This will include such measures as supporting citizen-based movements striving for garbage reduction, and private sector-based recycling facilities.
(To be funded by budget for FY 2002.)

- Put in place a social infrastructure and technical developments which meet the needs of waste disposal and processing. Examples include the promotion of a distribution and information system of the reverse manufacturing and the vitalization of recycling enterprises.
(To be funded by budget for FY 2002.)

- Lay out the basic plan for the creation and promotion of the recycling  society.
 (By the end of FY 2002.)

- Cross-agency projects aimed at restoring the natural state of wetlands and upland areas will be promoted, and citizen involvement in them encouraged.
(To be funded by budget for FY 2002.)

4 Expanded provision of housing and town planning

- Consider the amendment and bringing in of new standards related to the surveying and valuation of used real estate in order to stimulate this market.
(By the end of FY 2002.)

- Start to work on the creation of disaster prevention bases in key locations across a wide area around Tokyo Bay.
(By the end of FY 2002.)

5 Realization of an electronic government

- Attempt to bring forward the availability of completing administrative procedures online such as making applications and providing notifications.
(To be enacted by March 2002.)

- Lay down techniques and policies on use of the IC cards issued by administrative bodies, and promote their wide use in public services.
(To be enacted by March 2002.)

6.Local Independence and Revitalization Program

1  Local independence and revitalization

- Put in place a system whereby projects and responsibility are allotted according to the size of the local bodies.  (For example, local bodies with population more than 300,000 will be given more work and responsibility, and prefectural government will share an appropriate portion of the burden of the small-sized local bodies.) How this can be put into practice will be considered while the 27th Research Project on Provincial Systems is carried out.
(To be enacted by March 2002.)

- From the fiscal years 2001 and 2002 onwards the measures of each government agency included in the Support Plan for the Merging of Cities, Towns and Villages will be implemented, and such mergers will be vigorously encouraged before the expiry of the special laws relating to the matter in March 2005.
(To be enacted by March 2002.)
- It is imperative to obtain satisfactory local taxes in order to establish a stable local tax system, to correct the maldistribution of taxes, and to improve the efficiency of local finances and administration by providing a solid revenue base centered around autonomous revenue sources. To this end, we must look again at the reorganization and rationalization of state subsidies and local transfer taxes, and look closely at the very basics of tax revenue  transfers and the way local tax revenues are distributed. This reexamination must be conducted with due consideration to the deliberations of the Council for Reform and Promotion Of Decentralized Government, who have been looking at the distribution of local tax revenues, and to ongoing  examinations of the roles shared by local and central government. The potential effect on state, provincial and individual local government finances must also be taken into consideration.
(After October 2001.)

- A review of the way local transfer taxes are calculated, and the laying down of a concrete plan on the extent and scope for the revision of budgets for works. In addition, a reexamination of withheld revenue rates will be undertaken as an incentive to maximize tax revenues.
(By the end of March 2002.)

- In the area of local government finance projects, thorough revision and selective distribution of projects in order to minimize shortfalls in revenue and keep down debts will be attempted.
(To be funded by budget for FY 2002.)

2 Promoting reform of the Agriculture, Forestry and Fisheries sectors

- Revitalize urban areas with agricultural and fishing communities.
(To be enacted by the end of September)

- Restore village communities to be conducted on a cross-agency basis.
(To be funded by budget for FY 2002.)

- Strengthening of competitiveness in order to achieve agricultural production centers which do not need to be protected by safeguards (including rationalization of the production and distribution of vegetables, measures to take into account changes in consume habits).
(By end of September 2001.)

- Reform of rice cultivation  based on a complete overhaul of the distribution system to be decided by the end of November 2001.
(After October 2001.)

- Achieve rapid reform of agriculture by encouraging private investment and commercial management of agricultural enterprises.
(After October 2001.)

3 Regional revitalization through science and technology

- Make a vigorous attempt to support local economies by encouraging the continuous establishment of  world-class high-tech business ventures and make ?Science and Technology? the keyword of the regions. This is to be achieved through the holding of summits between regional, governmental and scientific bodies, by encouraging and strengthening university-based ventures, development of local research and technology, and at the same time creating a system wherein new businesses and industries are continuously launched.
(To be funded by budget for FY 2002.)

7.Fiscal reform

1 A budget with clear priority for the fiscal year 2002

- With the target of keeping the issuance government bonds within 30 trillion yen, conduct a thorough review of all areas of annual expenditure and a pursue vigorous cuts and priority allocation.
(To be funded by budget for FY 2002.)

2 Promoting reform of public investment

- There will be a comprehensive review of the necessity of all long term projects. Decisions will be made by the end of the year concerning projects involving fishing ports and fishing facilities.
(To be enacted by March 2002.)

- Special revenue from sources such as roads will be reviewed during the drawing up of the budget for the fiscal year 2002.
(To be funded by budget for FY 2002.)

- There will be selective reviews of major public works such as large dams, local harbors, ports and airports as indicated below.
- The emphasis will be shifted to existing urban areas in the field of municipal development works.
- Plans for new large scale dams will be put on ice. The need for dams already in operation will be carefully examined on the basis of water needs and clearly distinguished.
- Existing public housing stocks will be repaired and put to maximum use by leasing to the private sector.
- With the exception of remote island areas, limits will be placed on the new construction of local harbors, ports and airports.
(To be funded by budget for FY 2002.)

- The 800 or more public works which are currently halted will be reviewed after the selection process and those with no apparent future will be canceled or other measures will be carried out.
(To be funded by budget for FY 2002.)

- A strict, reform-based review of special public corporations and the work they perform will be undertaken.
(To be funded by budget for FY 2002.)

- The construction of rented public housing, container terminals, central government facilities, residences for public servants will be opened to private sector investment.
(To be funded by budget for FY 2002.)

- Online bidding about direct control enterprises will be introduced a year earlier than planned, in the year 2003. (Ministry of Land, Infrastructure and Transport.)
 (From year 2003 onwards.)

- A review of the nominated bidder system will be undertaken and fully-fledged competitive bidding encouraged in order to reduce the participation of inferior and unsuitable businesses enterprises.
(To be enacted by end of March 2002.)

3 Reform of the policy-making process

- The demands of the seven special areas will be addressed with due consideration to the work of cabinet groups such as the Council on Economic and Fiscal Policy, Council for Science and Technology Policy, IT Strategic Headquarters and Urban Renaissance Headquarters, and comprehensive and cross-cutting policies will be pursued in order to obtain a well-balanced budget for the fiscal year 2002.
(To be enacted by the end of September 2001.)

- A medium-term economic plan will be laid out, and, to help achieve this, a macroeconomic model will be developed to plot out the necessary adjustments to the economy, finance and social security.
(To be enacted by March 2002.)

- Concrete policy will be made clear regarding the handling of policy reviews, public accounts, budget and personnel management, in order to provide the public sector with private sector-style management and deliver effective and high quality services.
(To be enacted by March 2002.)

Appendix

Regulatory reform

Health care (to be finalised)

Welfare and child care

- Relax regulations to permit joint-stock companies to operate care houses and similar facilities, and promote facilities that are built by the public sector but operated by the private sector using PFI model.

(To be enacted by March 2002)

- Promoting private-sector contractor operation of public day-care centres.

- Promote private day-care centres by revising relevant government bulletins to permit more flexible accounting procedures (investigation underway, implementation during FY2001).

- Encourage private-sector involvement in operation of day-care centres (using PFI model).
(To be enacted by March 2002)

- Providing appropriate legislations for private day-care centers (improvement of the child-welfares' law such as introduction of the registered systems).
(To be enacted by March 2002

Human resources

- Amendments to the Contract Worker Law

- Priority to be given to amendments that can realistically be implemented (for middle-aged and older persons, the current dispatch period of one year should be extended to three years).
( Next extraordinary session of the Diet)

- Radical relaxation of regulations governing employment agencies (to be implemented immediately).

- Amendment of ministerial ordinance in order to allow employment agencies charge commission to job-seekers.

- Review maximum limit set by the Minister on commission charged to companies seeking employees.
 (To be enacted by March 2002)

- Deregulation on employment dispatch.

- Review operation to make it easier for dispatched workers to be employed after the dispatch.
 (To be enacted by September 2002)
 

Education

- Examine the evaluations' systems by the third organizations and revise univerty/colleage standard in order to facilitate reorganization of departments and faculties.
(To be enacted by March 2002)

- Practical research on new approaches of school management.
(To be funded by budget for the fiscal year2002 budget)

Environment

- Investigate institutionalization of land and environmental conservation policies  (including possibility of legislative measures).
(Next extraordinary session of the Diet)
 

Urban rejuvenation

- Expand open area to the public for the tax ledgers of fixed properties.
( Next ordinary session of the Diet)

- Review the regulations of urban redevelopment project, including the improvement of regulation in terms of the proportion of fireproof building.
(To be enacted by March 2002)

- Introduce legislations to facilitate the transfer of rights to the rebuilt building to encourage the rebuilding of "mansion"style apartment buildings.
( Next ordinary session of the Diet)

- Prepare a proposal bill to amend the comparted ownership law by the autumn 2002, including review of the prerequisites for rebuilding.
(To be enacted by the end of March 2002)