TOKYO (Nikkei)–With the first anniversary of the Great East Japan Earthquake approaching, rigid regulations are impeding reconstruction efforts by local governments and others, sapping their energy.
A reconstruction project in the village of Nishigo, in southern Fukushima Prefecture, highlights the difficulties. The project, proposed in May 2011, just two months after the March 11 disaster, is still in limbo. Local farmers and venture firms want to team up to build a vegetable processing plant, getting most of the electricity they need from solar power.
Municipal authorities in Miyako, Iwate Prefecture provided funds to restore seaweed farming following Great East Japan Earthquake.
U.S. consultancy A.T. Kearney Inc. floated the idea of building a vegetable processing plant in Nishigo and 25 companies, including Toshiba Corp. (6502) and Marubeni Corp. (8002), threw their weight behind it. The project was devised as a way of helping farmers in the village whose business suffered from rumors of radioactive contamination from the leaking Fukushima Daiichi nuclear power plant.
Lost in the shuffle
In October of last year, when the central Japanese government drew up the outline of a bill for “special reconstruction zones” that would free them from stifling regulations, Nishigo was the first to contact the Trade Ministry to sound it out about a specific project.
The vegetable processing plant idea got a good response from the ministry. “We will spare no effort to provide assistance,” said an official overseeing the deregulatory bill.
People involved in the project were optimistic that they would be able to get under way in early 2012 but they have yet to get the green light. “The central government said it would support our project. I wonder why (it is still in limbo),” said one village official with a sigh.
The bill setting up the special reconstruction zones was passed by the Diet in December. The law eases restrictions on converting agricultural land to other uses, but that is not enough to get the vegetable processing plant off the ground.
One problem is that if the land is used for a factory, the farmers who own the land will lose benefits, such as an exemption from fixed-asset taxes. Further deregulation is needed if local farmers are to venture into running a processing plant.
The government is expected to designate the first special reconstruction zone under the law by the end of January. Tokyo is generally supportive of reconstruction proposals, but still imposes regulations on specifics.
In one of the boldest fiscal moves in Japanese history, the central government has allocated a total of 18 trillion yen for reconstruction. But the big spending plan will have less of an impact than intended and will not create job security in affected areas unless it is accompanied by further deregulation and made more flexible.
Many local governments in areas hit by the Great East Japan Earthquake have been frustrated by the central government’s lethargy. On Jan. 17, the Omoe fishery association in the city of Miyako, in Iwate Prefecture, sent its first shipment of farmed “wakame” seaweed of the season.
The association asked the central government and the Iwate prefectural government for help in restoring facilities washed away by the giant tsunami that ravaged the coastline after the quake. But both Tokyo and the prefectural government were slow to respond.
The authorities in Miyako grew impatient and granted a subsidy from its own coffers to cover the cost of restoring the seaweed farming facilities. “We could not wait any longer for decisions from the central Japanese government and the prefectural government,” one city official said.
While investment to help people in affected areas rebuild their lives is urgently needed, poorly thought out or hastily devised projects are unlikely to be worth the cost.
The city of Ishinomaki in Miyagi Prefecture set up a consultative body together with about 20 companies, including IBM Japan Ltd., in October to discuss reconstruction projects. The companies came up with many ideas using their cutting-edge technology, including finding new sources of electricity for households using fuel cells, and ways to improve seafood processing, in hopes of attracting funds from the central government’s third supplementary budget for fiscal 2011.
But the Ishinomaki municipal government soon began to harbor doubts about the wisdom of pushing ahead with the projects and decided to slow down. The city feared the state-of-the-art infrastructure called for could become a white elephant. It was also concerned about how the cost of the investments would be shared by the public and private sectors.
“The governments of affected areas should spend one to two years compiling reconstruction programs,” said Yutaka Okada, an economist at Mizuho Research Institute Ltd.
Okada conducted a survey of reconstruction projects in Kobe’s Nagata Ward, which was ravaged by the Great Hanshin Earthquake in 1995, and in the town of Okushiri, in Hokkaido, which bore the brunt of a tsunami triggered by the Hokkaido Nansei-Oki Earthquake in 1993.
Nagata Ward came up with a reconstruction program just a few months after the Great Hanshin Earthquake. But Okada found that newly built commercial facilities remained shuttered and that the number of people making chemicals and shoes, the area’s main industries, fell sharply after the quake.
In Okushiri, Okada found there had been little progress in relocating people to new residential areas established on higher ground after the town was hit by the tsunami, and that the number of local people engaged in the fishing industry had fallen by half.
“If reconstruction policies do not take into account issues that have existed since before the disaster, such as the aging of population, the money invested will have been wasted,” Okada said of the reconstruction effort in Tohoku.