The basic strategy for structural reform, "Basic Policies for Macroeconomic Management and Structural Reform of the Japanese Economy" (Cabinet decision of June 26, 2001) was formulated in June 2001 and with this as the starting point, broad structural reform has been promoted. In order to further advance this trend and to promote regulatory reform through initiatives of local communities in areas where advancement has been delayed, the introduction of special zones for structural reform was decided by the "Basic Policies for Economic and Fiscal Policy Management and Structural Reform 2002" (Cabinet decision of June 25, 2002).
Already there have been 426 cases of detailed proposals for special zones for structural reform from local governments and private sector corporations and in light of this, it is necessary to strive to make the system more concrete. Thus, the Government has set out these Basic Policies regarding the purpose of the system as well as ways of approach that should be considered in making the system more concrete.
1. Purpose of special zones for structural reform
In order to revitalize the economy, it is essential to expand the private business sector by making maximum use of private sector vitality through advancing regulatory reform. Given Japan's current severe economic condition, it is necessary to advance structural reform through regulatory reform as soon as possible, but in reality, there are areas in which implementation of nationwide regulatory reform has been delayed due to various circumstances. In light of these conditions, special zones for structural reform will be introduced so that, through plans compiled through the initiative of local governments and private sector corporations, regional communities establish special zones that will implement exceptions to regulations in a manner that is in line with respective special local characteristics, thus advancing structural reform through initiatives of their own communities.
As a result of the introduction of special zones for structural reform, successful examples of structural reform in specific areas will be showcased, and through thorough assessments, they will be extended to nationwide structural reform and realize the revitalization of Japan's economy as a whole. At the same time, it will also lead to the revitalization of regional economies by eliciting special local characteristics, by the accumulation of industry in response to these characteristics and by the creation of new industry.
2. Ways of approach for the promotion of special zones for structural reform
(1) "Revitalization through the competition of ideas and innovation" by local governments and the private sector
Efforts will be made to change the concept from a system that strives for balanced development throughout the country by indicating a national model beforehand to one where structural reform is planned through regulatory reform which is appropriate to the situation of local communities by local governments and private sector corporations so that the vitality of the economy and society can be extracted through competition between self-reliant communities. In order to achieve this, efforts will be made to change the way of thinking from the concept of "uniform regulations throughout the country" to approving regulations that respond to special local characteristics.
(2) Respect for the "spirit of self-help and self-reliance"
The purpose of special zones for structural reform is to introduce exceptions to regulations that match special local characteristics by the planning of local governments and private sector corporations on their own initiatives, and in order to make it a structure in which this kind of latent potential of local communities can be freely realized, the "spirit of self-help and self-reliance" is necessary. From this perspective, by establishing special measures for individual regulations, in cases where measures are necessary to prevent hindrances that may arise both within and outside special zones for structural reform, the principle will call on local governments to actively respond to the contents of the special measures.
Furthermore, in order to make the best use of the "spirit of self-help and self-reliance" of local communities, conventional fiscal measures will not be taken in realizing the special zones.
(3) Targeting regulations that are as broad as possible
In light of principles such as (1) and (2) above, in order to make possible plans on the initiatives of local governments and private sector corporations, regulations that are as broad as possible will be targeted.
In addition, regulations for which special measures can be established taking into consideration special local characteristics for special zones, will be clarified in a list beforehand, and local governments will be able to choose from among them when they formulate plans for special zones for structural reform. Furthermore, it will be possible to expand this list based on proposals from local governments and others for new special measures for regulations.
(4) Integration of procedures and decision-making process at the Cabinet
Measures to be taken in local communities for the revitalization of the economy will be comprehensive policies spanning various areas. Furthermore, if one reviews the proposals that are currently being raised by local governments, private sector corporations and others, it becomes apparent that there are many instances of requests for a special zone for structural reform that will need to be realized by combining special measures for various regulations from many ministries and agencies. As such, decisions about accepting requests and which regions will be designated as special zones for structural reform will be made in an integrated manner within the Cabinet.
(5) Assessments of special measures
After a certain period, assessments will be made of special measures for regulations taken for special zones and the necessary measures will be taken based on those results.
3. Schedule
(1) For those proposals that were submitted by local governments, private sector corporations and others, assessment will be conducted with the Cabinet as a whole with the central role played by the Cabinet Secretariat, and the results of the assessment will be decided as the "Programs for the Promotion of Special Zones for Structural Reform" at the Third Meeting of the Headquarters for the Promotion of Special Zones for Structural Reform to be held at the beginning of October 2002. The Programs will determine the approach to be taken by the Government in response to requests concerning special measures for regulations and will target broad regulations such as legislation, ministerial ordinances and notifications.
(2) Upon receiving the decision of the "Programs for the Promotion of Special Zones for Structural Reform," legislative process will be initiated in order to compile bills to provide for the special measures necessary to realize the policies outlined in 2. above.
| 
