Japan has signaled change but must follow through fully

The government’s deregulation package, though far from satisfactory in scale and content, enshrines some important steps signaling greater reform in the future, according to Ushio Chujo, a professor of public economics at Keio University.

“I would give it 10 marks out of a possible 100,” Chujo said, sizing up the final version of the three-year government deregulation program announced Mar. 28. With the addition of 890 new measures, the program now includes 2,823 deregulatory steps meant to bring about a radical structural reform of the nation’s economy. “There are some 10,000 items currently subject to various government authorization or licensing. So, I might as well give (the program) 30 marks,” Chujo said.

Intrinsically, he said, deregulation should be carried out in far greater scope and focus on deeper problems, which would mean privatizing or introducing market mechanisms for public management systems. Having said that, however, Chujo maintains that the package contains some significant steps — notably in the transportation and financial sectors — which may lead to greater reform in other sectors.

In a surprise to many deregulation advocates, the government decided to repeal the so-called supply-demand adjustment method for transportation policies — a measure that limits the number of flights, taxis and buses to avert what the government sees as excess competition. Under the system, newcomers are restricted until demand arises.

“If we can go that far in such heavily regulated areas as transportation and finance, then we should be able to do the same in other areas,” Chujo said. He also pointed out that some of the specific measures proposed for transportation can be applied to other sectors.

While acknowledging “substantial changes” in the government’s attitude toward deregulation during the past year, Chujo said he remains “somewhat pessimistic.” Pointing to already strong resistance from some members within the ruling Liberal Democratic Party, he said that Prime Minister Ryutaro Hashimoto may have to stake his political career if he really means to carry out drastic reform.