The government’s top priority at the moment is to resuscitate the Japanese economy by stabilizing the shaky banking sector and pushing domestic business recovery through expanded governmental and consumer spending. At the same time, as the nation is poised to enter the 21st century, the urgent need to implement political, economic and social reforms cannot be overemphasized. This is particularly true because the lackluster performance of the Japanese economy in the 1990s can be largely attributed to the failure to restructure it to keep pace with the rapid globalization of the world economy.

Reforming the administrative structure can crucially influence successes in all these changes since a highly centralized bureaucracy continues to regulate Japan’s economic and social activities. The fate of an outline for administrative reform adopted last week by the government, therefore, is a matter of great concern. The proposed reform of the central bureaucracy is designed to create a “simpler, more efficient and more transparent government” capable of dealing with various issues under stronger political leadership.

The reform is mainly aimed at strengthening Cabinet functions to establish political leadership in state affairs and at slimming down the government into a smaller number of ministries and agencies. The question is whether the government will succeed in decentralizing power, implementing further economic deregulation, disclosing more information, privatizing more government-backed enterprises and overhauling the central bureaucracy.

The biggest worry about the reform proposal is: Can we expect popularly elected government officials to be able to exert stronger political leadership in conducting national affairs? Bureaucrats will try to continue playing a major role in policymaking. Thus, politicians’ policy-planning abilities will be critical. The outline also calls for the appointments of vice state ministers who are more powerful than the existing ones and the abolition of a system of having bureaucrats answer questions for state ministers in Diet sessions. This imposes heavier responsibilities on politicians in government affairs.

The reform is designed to slim down the bloated bureaucracy. The existing 22 ministries and agencies will be reorganized into one office and 12 ministries and agencies. At the same time, provisions giving discretionary power to individual ministries and agencies will be abolished. The number of bureaus in ministries and agencies will also be reduced, which inevitably will entail a 25 percent cut in the number of national government employees.

Independent public enterprises will be required to develop medium-term plans, evaluate their own business results and disclose management information for transparency and self-responsibility. This is one of the important issues critical to the success of administrative reform. Efforts should be stepped up to turn even more government-run organizations into such enterprises, which should then be privatized as early as possible.

The administrative reform is one of the six major reform projects first proposed by the government of former Prime Minister Ryutaro Hashimoto. The proposal adopted last week is based on that initial proposal but contains even more drastic measures that resulted from a policy agreement between the Liberal Democratic Party and the Liberal Party, partners in the new conservative coalition government. The government wants to submit related bills to the Diet by April so that the reform will be implemented in January 2001.

However, agreement remains pending on some major issues, including the proposed separation of the Finance Ministry’s fiscal and financial policymaking functions. On this point, the outline only says that the new “Treasury Ministry” will be tasked with dealing with financial crises “for the time being.” This contradicts an agreement worked out by the LDP and the opposition forces, led by the Democratic Party of Japan, during an extraordinary Diet session last autumn. An issue can be made of this ambiguity in the coming Diet debate on the related bills.

Even greater efforts must be made to remove ambiguities and shortcomings before the government finishes drafting the bills. Mired in tradition, bureaucrats will desperately resist any reform that could erode their vested regulatory powers. But Japan’s vertically partitioned administrative organization has demonstrated its inability to effectively control crises, both natural (the Great Hanshin Earthquake) and man-made (the current economic crisis). It is time this nation rid itself of evil traditions.

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