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(Provisional Translation)

Outline of the "Second Report Regarding Promotion of Regulatory Reform"

December 12, 2002

(Main Points of the Research and Deliberations)

(Outline of the Report)

Chapter 1 Cross-Sectoral Fields

  1. Creation of New Businesses

    1. Regulatory Reforms Regarding Fund Provisions

      • Revising disclosure regulations under the Securities and Exchange Law(Revising private securities placement rules, Shortening validation moratorium for financial statements) [Consideration to start within FY 2002 or to be considered within FY 2002]

    2. Regulatory Reform Regarding Business Mechanisms and Management

      • Revising regulations requiring open-market purchases of shares ("one-third rule") [Consideration to start within FY 2002]

      • Developing simpler business opening systems (Developing a cross-sectoral system regarding franchises [To be implemented as early as possible within FY 2003])

      • Revising government procurement system (Revising qualifications for bidders [Consideration to be continued from FY 2002])

    3. Regulatory Reform Regarding Personnel Development, Supply, etc.

      • Regulatory reform to support provision of personnel for new businesses (Expanding staffing services and fixed-term employment contracts [Necessary actions including the submission of a relevant bill in the next ordinary Diet session])

      • Developing personnel to undertake the creation of new businesses (Developing institutions for international schools [To be implemented within FY 2002])

  2. Reforming Government-Made Markets through Increased Private Sector Participation

    1. Private sector’s participation in public services

      • Expanding private sector consignment of the operations against parking violations [Conclusion within FY 2003])

      • Improving state and local taxpayers’ convenience [Measures to be taken within FY 2003]

      • Expanding private sector consignment of the operations regarding patent rights [Measures to be taken within FY 2003]

      • Organizing independent administrative agencies [Prompt consideration and conclusion after the first medium-term regulatory reform period after the establishment of an independent administrative agency]

      • Promoting of privatization, and transfer and private sector consignment of the government operations [Gradual implementation in and from FY 2002]

  3. Development of Business and Living Infrastructure Contributing to Vitalization

    1. Public Utility Sector (Telecommunications, electricity, gas and transportation areas, etc.)

      • Promoting new market participants and developing competition rules (Revising regulations and the like on new market participants and measures to train new market participants [Consideration and conclusion within FY 2002])

      • Opening essential facilities (Promoting separation in accounting, firewall against information, etc. [Consideration and conclusion within FY 2002])

    2. Developing Legal Services Infrastructure

      • Same as the Section 2 "Promotion of justic system reform" of the Chapter 2 "Legal Affairs"

    3. Upgrading City Centers

      • Rationalization through a shift to performance provisions for the Fire Service Law and the Construction Standard Law [Consideration to start in FY 2002 and consecutive implementation]

      • Rationalizing regulations related to the Aviation Law (Rationalizing restrictions on building height and the like [Consideration to start in FY 2002, partial conclusion within FY 2003])

  4. Development of Ex-Post-Facto Checking Rules

    1. Promotion of information disclosure

      • Significance (As the base for accurate choices by consumers and users and their freedom of choice)

      • Important matters subject to assessment (Accounting standards [Consideration within FY 2002], Education (Universities), Welfare [Measures to be taken within FY 2002])

    2. Promotion of the third-party assessment

      • Significance (Offering the assessment results as food for thought in areas where it is difficult for consumers and users to make accurate assessment on the basis of information disclosed)

      • Important matters subject to assessment (Welfare (Child care centers, Nursing care services), Education (Universities), [Measures to be taken within FY 2002, and others])

    3. Development of Claim and Conflict Settlement

      • Significance (Flexible settlements of claims and disputes through simpler, quicker and cheaper out-of-court systems)

      • Submission of a basic alternative dispute resolution (ADR) law, disclosure of the claim and dispute cases, development of comprehensive information windows for accurate selection

  5. For the Appropriate Implementation and Early Adjustment of the "Special Zones for Structural Reform" System

    1. Appropriate enforcement of "the Law concerning Special Zones"

      • Surveillance of the formulation of ordinances, notification, etc.

      • Observation of the process of formulation of "Basic Policies"

      • Precise evaluation of preferential measures against regulations conducted in the special zones.

    2. Further promotion of regulation reform including the use of the special zones system

      • Further consideration of reform items that are listed for "nation-wide implementation", etc.

      • Publicity of the items "feasible under the current systems"

    3. Addition of regulations that are to be adopted in the special zones system and the second proposal campaign

      • Active response to proposals from "the second proposal campaign"

      • Prompt amendment of basic policies and the amendment of the Law concerning Special Zones in the next ordinary session of the Diet


Examination Results at the Council for Regulatory Reform regarding "Reform Items with Clear-Cut Time and Content to be Implemented Nationally: Schedule 2" under "Program for Promotion of Special Zones for Structural Reform" (Decision on October 11, 2002 by the Headquarters for the Promotion of Special Zones for Structural Reform)

Chapter 2 Specific Fields

  1. Competition Policy

    1. Review and strengthening of Antimonopoly Act enforcement

      • Introduction of surcharge leniency program and review of surcharge system [To be implemented in FY2003]

    2. Review and strengthening of the investigation function and system of the Fair Trade Commission

      • Review and strengthening of the investigation function and system concerning violations of the Antimonopoly Act [Implementation in successive steps from FY2003]

    3. Strengthening Enforcement in Specialized Fields

      • Strengthening market monitoring functions in the field of securities transactions [To be studied and conclued by the end of FY 2003]

    4. Review of Government Procurement Systems

      • Ensuring transparency of "Contract Target with Small and Medium-sized Enterprises" [To be implemented in FY2003]

      • Promotion of diversified bidding/contracting methods [Implementation in successive steps from FY2003]

  2. Legal Affairs

    1. Promotion of judicial reform

      • Review of Article 72 of the Lawyers Law (the predictability of the scope and modes of activities that are subject to restrictions) [Measure to be taken by the end of FY2003 at the latest]

      • Promoting cooperation and coordination between lawyers and foreign law solicitors permitted to practice in Japan [Bill to be submitted in the next ordinary session of the Diet]

    2. Facilitating fund procurement by establishing a legal system for movables and finance receivables as collateral

      • Facilitating fund procurement for businesses [Study to be commenced in FY2003]

  3. Financial Sector

    1. Arranging the infrastructure for the development of financial services industry

      • Relaxation of trust property limitations under the Trust Business Law (Addition of the intellectual property rights [To be reviewed and concluded within FY 2003; to be implemented in successive steps]

    2. Improving systems to promote asset liquidation

      • Introduction of escrow system [To be studied in FY2003]

    3. Arranging the bases for securities markets

      • Expansion of the scope of qualified institutional investors [To be reviewed and concluded in FY2002]

  4. Education / Study

    1. Diversification of education bodies

      • Entry of stock companies into the field of graduate-level vocational and practical education for workers, Improvement of the legal system to accept community schools, Relaxation of examination standards in approving the establishment of school juridical persons [Study to be undertaken and concluded in FY2003]

    2. Promotion of information discloure concerning education entities

      • Introduction of an accreditation system by third-party organizations [To be implemented in FY2002]

    3. Revitalization of elementary and lower secondary school education

      • Promotion of education program diversification (Flexible application of the official school curriculum guidelines [To be implemented starting in FY2002])

    4. Revitalization of higher education and promotion of industry-university collaboration

      • Drastically relaxing regulations on the ratio of students to school building area and the ratio of holding areas, in approving the establishment of universities [To be Implemented in FY2002, for further review to be continuously studied in FY2002]

      • Clarification of the criteria for double engagement of faculty members of national universities during regular working hours [To be implemented from FY2003]

  5. Medical Care

    1. Improving the efficiency of medical processing by promoting the application of information technology

      • Keeping medical care information, such as electronic medical records, outside of medical institutions [To be implemented promptly in or after FY2003]

    2. Promotion of patient (the insured) choice

      • Promotion of allowing patients to choose the combined use of public insurance medical care and medical care not covered by public insurance [To be implemented in FY2003 (Implementation in successive steps)]

    3. Review of the medical fee system

      • Considering a plan to introduce the diagnosis-related group/prospective payment system [Plan to be indicated and study started in FY2003]

    4. Medical care providing system

      • Review of community medical care program including regulation on hospital bed numbers [Study to be undertaken starting in FY2002 and measures to be adopted at an early date in FY2005]

    5. Deregulation concerning drugs

      • Deregulation in order to make it possible for general retail outlets to sell certain kinds of drugs [Study by specialists to start in FY2002 and conclusion to be reached possibly by the end of FY2003]

  6. Welfare

    1. Long-term care for the elderly

      • Review of users bearing the cost for special nursing homes for the elderly (collection of the hotel cost) [Conclusion to be reached in FY2002 and measures to be implemented in April 2003]

      • Defining the scope of physical care services feasible in visiting care (allowing home helpers, etc. to conduct the suctioning of phlegm under certain conditions, etc.) [Study to be undertaken and concluded in FY2002]

    2. Childcare

      • Promotion of stronger ties between childcare centers and kindergartens (Promotion of childcare worker qualification acquisition by kindergarten teachers and kindergarten teacher licence acquisition by childcare workers [To be implemented in FY2003], Promotion of integrated kindergarten and childcare center management [To be implemented in FY2003]

      • Review of the obligation to have a kitchen in place at childcare centers, such as the joint use of a kitchen [To be implemented in FY2003]

  7. Employment and Labor

    1. Deregulation to enable smoother job transition

      • Fundamental deregulation of job placement services (Deregulation of fee-charging to job , Deregulation of free job placement services) [Accelerate examination and required measures for a bill that is to be submitted to the next ordinary session of the Diet]

    2. Deregulation to enable diversified work options

      • Drastic review of the worker dispatching system (Expansion of the temporary work period limitation or its abolition, Expansion of allowable job categories for temporary work (including the lifting of the prohibition of dispatching work service to the "manufacturing" sector) [Accelerate examination and required measures for a bill that is to be submitted to the next ordinary session of the Diet]

      • Expansion of fixed-term work contracts (Extension of the upper limit of the fixed-term work contract period to three or five years) [Required measures for a bill that is to be submitted to the next ordinary session of the Diet]

      • Expansion of the discretional work system (Simplification of the procedures and an expansion of the business places for its application)[Accelerate examination and required measures for a bill that is to be submitted to the next ordinary session of the Diet]

    3. Reform of the appropriate system for new types of workers

      • Considering legislative proof of the criteria and rules of dismissal [Required measures for a bill that is to be submitted to the next ordinary session of the Diet]

  8. Agriculture, Forestry, and Fisheries

    1. Regulation of farmland utilization

      • Preservation of good farmland due to the optimization of regulations on farmland use [Examination to start in FY 2002 and to be implemented in FY 2003]

    2. Regulation of the Agricultural Cooperatives

      • Review of the business operation of agricultural cooperatives (Securing sound management and business administration) [Examination/conclusion concerning the fundamental direction in FY 2002 and to be implemented in succesive steps after FY 2003]

      • Review of the business chain of agricultural cooperatives (Split of business or business transfer) [Establishment of the accounting allocation standard by division, to be implemented in FY 2002; the complete accounting by division, to be implemented in successive steps after FY 2003; initiation of examination/conclusion about the fundamental direction in FY 2002 and to be implemented in successive steps after FY 2003]

      • Securing conditions for fair competition (Verifying the system regarding the application exclusion of the Antimonopoly Law, Strengthening the regulations on Antimonopoly Law violations) [Examination to start in FY 2002, conclusion about the fundamental direction in FY 2003 and to be implemented in successive steps after FY 2003]

  9. Energy

    1. Review of the total electric power business system

      • Expansion in the scope of retailing liberalization, Establishment of the connection-supply tariff charge system [To be implemented in FY 2002]

    2. Structural reform of the gas business as a whole

      • Expansion in the scope of retailing liberalization[To be implemented in FY 2002]

    3. Current C fuel oil tariffs [To be implemented by FY 2005]

  10. Housing, Land and Public Works

    1. Promotion of high efficiency and high utilization in metropolitan areas

      • Promotion of three-dimensional space utilization of road space and buildings [Study started in FY 2002 and to be concluded after FY 2003]

    2. Review of procedures corresponding to requests in a new age

      • Review of building check/inspection services and temporary use procedures [Study started in FY 2002 and to be concluded in FY 2003]

    3. Promotion of performance regulation

      • Flexible operation of parking area inlet/outlet regulations [Study started in FY 2002 and to be concluded in FY 2003]

    4. Development of the real estate market

      • Information disclosure of real estate transaction prices [Study started in FY 2002 and to be concluded in FY 2003]

  11. Transport

    1. Promotion of one-stop services for import-export procedures at harbors and registration procedures for automobile possession

      • Import-export procedures at harbors [To be operational at the earliest possible time in FY2003], registration procedures for automobile possession [To be operational in FY2005]

    2. Revision of regulations of vehicles

      • Revision of loading regulations and height regulations of vehicles [To be examined in FY2003/ To be concluded by FY 2004]

  12. Environment

    1. Elimination of the heat island phenomena in cities.

      • Research and examination of mechanism, Promotion of measures (Improvement of the city structure), Drawing up outlines concerning heat island countermeasures [To be implemented in FY2003, and so on]

    2. Revision of environmental assessment policies concerning natural gas power plants in order to alleviate global warming.

      • Simplification of some standard procedures regarding environmental assessment. [To be launched in FY 2003: sequential examination afterwards]

    3. Promotion of the formation of recycling markets and facilitation of appropriate waste measures

      • Simplification of authorization procedures of disposal business set-up and disposal business facilities [To be implemented in FY 2003]

  13. Facilitation of Business Activities

    1. Reform in fuel cell related areas

      • Attaining preliminary operation and diffusion of Fuel-cell-powered, hydrogen infrastructure, household fuel cells [To be implemented respectively from FY 2003 to FY2004]

    2. Reform of content related industry including the animation industry

      • Application of law to prevent the delay of payment of sub-contraction fee regarding service consignment trade including production of content (law 120, 1956:Sub-contraction law) [To be submitted to the next ordinary diet session: as for operation, to be implemented soon after the enforcement]

      • Addition of trust to the copyright law to facilitate the diversity of fundraising, etc. [To be discussed and concluded in FY2003]

    3. Reform of "regulations that are barriers to private business activities"
      (Described the details on 77 items in the Schedule)

      • To simplify the administrative procedures…51 items

      • To clarify the interpretation of existing laws and rules…5 items

      • To revise standard authorization, safety and qualification systems…21 items

Council for Regulatory Reform