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Trade Policy Country/Regions January 17, 2018  
Japan: Special Zones for Structural Reform

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In order to promote growth in a stagnant economy, the Government of Japan (GOJ) recently initiated a program called Special Zones for Structural Reform. The primary purpose of this program is to establish areas where central government regulations would be relaxed or eliminated to promote business activities and stimulate regional economic growth. In July 2002, Prime Minister Koizumi established the Headquarters for Special Zones for Structural Reform, declaring that the Special Zones initiative would be a priority of his regulatory reform policy. The Headquarters office, which the Prime Minister directs, has been working with local governments to facilitate economic reform and deregulation. The Prime Minister strongly supports the Special Zones initiative and he firmly believes it will help reinvigorate the moribund Japanese economy.

The response to the initial request for Special Zone applications was impressive and indicated the great popular desire for deregulation to spur the domestic economy. A total of 426 proposals were made in response to this initial request on only 30 days notice. A second request for submission of proposals met with an even greater response as a total of 651 proposals, including 111 reformulated ideas, were submitted for consideration. The Prime Minister has thus far approved a total of 117 Special Zones. These Zones are scattered throughout Japan's 47 prefectures and focus on specific business activities where the prefecture has a comparative advantage. Notable examples of Zones include port management facilities in seven major air and sea ports, IT software for new charter schools, and the leasing of agricultural land.

How the Special Zones Program Works

First, interested businesses, based on their business plan, should determine what regulations they would like to see relaxed or eliminated. Once that is decided, they need to describe their idea on a "Special Zones Idea" application form and submit it to the Headquarters. After submitting an idea application, next steps could include discussing the proposal with appropriate local government officials, creating regional alliances in support of the proposal, and lobbying relevant Ministries and Diet members on the proposal's merits. If ministries and agencies approve the zone idea, local Japanese governments can submit an application to run the zone (thus the importance of consulting with local governments before and during the idea phase) and request that the Prime Minister approve their zone application.

The deadline for the next round of Special Zone proposals will be in spring 2004. The GOJ is expected to continue soliciting zone proposals on a periodic basis (about twice a year). The GOJ encourages foreign firms to submit Special Zone proposals and to participate actively in this initiative and the US government is actively working to assist US companies with zone ideas and in the application process.

The Prime Minister is eager to announce the first successful zones and is optimistic that successful zones will be expanded on a national level and help to revitalize Japan's economy. In this sense, the Special Zones for Structural Reform can be viewed as a pilot program to stimulate the Japanese economy through local and business-led regulatory reform and potentially could provide new opportunities for American businesses.

Information Technology Special Zones
Seven Zones related to IT have been approved. Click here for more information.

For further information on the Special Zones for Structural Reform please contact:
John Neuffer, Deputy Assistant USTR for Japan, Washington, D.C.
TEL: 202-395-5070

William Duff, Economic Section, U.S. Embassy, Tokyo
TEL: 81-3-3224-5694

Or see GOJ Headquarters for the Promotion of Special Zones for Structural Reform

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