Tohoku Earthquake and Tsunamis - Rebuilding Japan: EBC Proposals to Accelerate Relief and Economic Recovery

The European Business Council in Japan (EBC) offers our deepest sympathy to the people of Japan following the recent earthquake and tsunamis and their aftermath. This has been a natural disaster of unprecedented scale and we extend our condolences to all those affected.

We profoundly respect the Japanese people for their strength in the face of this disaster, as well as the Government, volunteers and relief agencies for their determined and effective response. We fully support Prime Minister Kan and his Government for their intense efforts to lead the nation through these challenging times. The EBC believes that with such commitment and energy, combined with the support of the international community, Japan will re-emerge as a stronger country, and our desire is to do everything we can to help in this process. European companies based in Japan and Europe are contributing to the relief and recovery effort through corporate donations and initiatives aimed at addressing immediate and ongoing needs arising from the disaster.

The pace and extent of Japan’s recovery will be determined by choices, including choices about policies and how they are implemented. The aim of this paper is to offer our help with those choices, where our own experience and expertise allow.

Many EBC Member companies have worked with governments in disaster response situations and understand how resources and knowledge can be deployed in both relief and reconstruction efforts. Drawing on this, and our strong commitment to Japan, we are eager to share with the Japanese Government our recommendations for ensuring the country has the best possible platform for an expeditious recovery.

The EBC recommendations encompass all areas that we feel could help in the relief efforts and also contribute to the longer-term economic recovery. As we go to press, some of our recommendations have already been implemented, but others have yet to be addressed. The scale of this disaster requires every possible action to ensure that both the relief efforts and recovery proceed as quickly as possible.

It is in this spirit that the EBC offers these recommendations to the Japanese Government and we hope that they will be helpful in achieving both these short and longer-term goals. Moreover, we stand ready to assist Japan in any way possible.

The EBC welcomed the announcement made by the Ministry of Finance Customs and Tariff Bureau on 18th March 2011, of measures to allow swifter importation of relief goods. The earliest possible introduction of such measures is vital to the success of any relief effort and underlines the importance of advance planning.

The MHLW Pharmaceutical and Medical Safety Bureau Compliance and Narcotics Division has asked the Head of the MOF Customs and Tariff Bureau, Customs Clearance Division to allow importation of pharmaceuticals, including medicines not yet approved in Japan, by foreign governmental emergency assistance/disaster relief forces, even if they lack the required documentation. However, non-governmental agencies will continue to need prior confirmation from the MHLW Pharmaceutical and Medical Safety Bureau Compliance and Narcotics Division, which could delay their contributions to the relief effort.

It would help to speed up relief efforts, as well as avoid unnecessary disposals, if packaged food donations not requiring refrigeration could be granted immediate customs clearance without the need to check for ingredients or additives, which may not be allowed presently in Japan.

Food shortages in disaster-hit areas and in the Kanto region could be eased, and the risk of steep price rises averted, if the Japanese authorities were to provide a list of the items most needed and then ease restrictions on their importation. This would entail lifting any bans/quotas/tariffs that may be in place, on a temporary basis. Special measures may be needed in such cases as milk, where supplies have already been severely disrupted by damage to packaging facilities and transport links and may be further affected by contamination problems. Facilitating the importation of UHT milk would be an obvious step to easing this situation. Furthermore, building up and maintaining a national reserve would secure long-term access for Japanese consumers to adequate supplies at reasonable prices.

The flow of donations can be delayed by the need to consult multiple sources of information to find out what is needed, combined with a limited number of drop-off points. For example, the Ministry of Defence has implemented a scheme enabling direct donations of items to the Self Defence Force. However, this requires prospective donors to contact the local prefectural government, who are responsible for coordinating with the local SDF troop to arrange a date, time, and specific base/camp for the donor to drop off the goods. The onus is then on the donor to make the delivery to the base/camp, which can prove difficult. Prefectural governments are themselves also collecting items on behalf of donors, but the list of items needed and procedures vary from prefecture to prefecture and, here again, there are often limited collection points.

Temporarily relax entry requirements for aid agency personnel, so that it is sufficient for them to have received permission from a Japanese Embassy abroad or a formal request from the Japanese Government, and ensure that no further paperwork from foreign embassies in Japan is needed.

It is important that, during the crucial period of reconstruction, essential materials and supplies are made readily available. This calls for the easing of importation procedures for products needed in the reconstruction effort that may not meet Japan specific requirements, yet are fully compliant with EU / international standards.

There is universal agreement that the cost of recovery and reconstruction will be enormous (possibly as much as 25 trillion yen) and that extraordinary measures will be needed to help meet this cost. One practical suggestion might be to introduce a temporary earthquake / disaster levy and increase the consumption tax with the obvious proviso that the funds raised are to be used for the rebuilding effort.

Many businesses have been severely damaged by the disaster, with assets, workforces and customer-bases decimated, and supplies and deliveries disrupted. Yet vibrant businesses, both national and local to the disaster areas, will play a fundamental role in any recovery, injecting money and jobs into the economy. So it is essential for companies to quickly secure sufficient funds to refinance their businesses, invest in new premises and equipment, and rebuild their workforces. However, they are unlikely to be able to pay standard interest rates on any loans they receive. Government intervention could therefore be crucial in ensuring that emergency loans and longer-term finances are made available, at affordable rates, as soon as they are needed.

It is vital that the development of business in areas affected by the disaster is encouraged. Companies that had invested before in these areas will probably be facing severe financial difficulties and need support. Others might consider moving into the areas if sufficient incentives are created. This all argues for temporary exemption of businesses in the affected areas from levies, such as fixed property and corporate taxes.

The ongoing cost of responding to the disaster and the anticipated cost of reconstructing the affected areas present new, unforeseen challenges for the Government and country. It is understandable therefore that the DPJ should need to review its existing policies as well as policy pledges, such as the introduction of toll-free highways, increases in child allowances, etc., and consider how these may need to be revised in the light of the new economic challenges. The EBC urges the DJP to ensure that such a review is conducted quickly so that the necessary adjustments can be made, new objectives can be set, and efforts can be focussed accordingly.

The need for reconstruction opens up new possibilities for green development, including rebuilding some communities as “passive communities” (an adaption of the “passive house”), using materials that reduce energy consumption and are environmentally friendly. These communities would be independent of public power supplies and capable of contributing to further power saving efforts and CO2 reduction. Such initiatives could serve not only to boost living standards, but also stimulate local communities and businesses.

Many European Governments have first-hand experience of nuclear power generation and could offer the Japanese authorities valuable information and advice on prompt containment of the unstable situation at the Fukushima nuclear power plant, as well as measures for managing long-term consequences.

Radiation detectors are in huge demand now that every link in the supply chain must ensure it is not using or supplying radiation-contaminated products. There is an urgent need for guidance on the different types available and their appropriate use.

The availability of spot information on radiation levels after press conferences is proving insufficient to promote public awareness and confidence. Although some data is available online, much comes from private, not calibrated, Geiger counters and even official Geiger counters are very often out-of-date. Publishing official, real time information on television and radio could increase public awareness and preparedness, as well as reinforce trust and confidence that the situation is under control.

Improper handling of contaminated foods and/or using affected vegetables as food mixtures for animals presents an immediate health risk that could potentially cause an even greater problem outside of the contaminated areas. As indicated in Recommendation 13 above, we propose that Japan should create a dialogue with European experts on how to confront and contain such risks.

The availability of official, accurate, up-to-date briefing materials in English is crucial to building confidence amongst non-Japanese speaking media/journalists and their proper understanding of the latest developments. A lack of adequate materials can otherwise cause misunderstandings and create unnecessary alarm.

At present, the Ministry of Economy, Trade and Industry (METI) functions both as a promoter of the nuclear power industry and as its regulator. Separation of the two functions, by establishing an independent regulatory authority, could increase transparency and enhance safety.

Companies are now receiving requests from some overseas customers for levels of radioactivity in freight to be measured at Japanese airports and major sea ports, prior to shipment. Providing such a service could reassure customers and boost confidence in Japanese products. However, most freight and logistics companies do not have the capacity to conduct such checks. Installing appropriate equipment at port locations would allow such a measurement service to be carried out on an optional and cost-recovery basis.

There is general acceptance in Japan that, for the foreseeable future, the country needs to conserve energy as much as possible. By introducing daylight saving time, power consumption during the peak summer season could be significantly reduced. Given that the technology is readily available to execute the transition and that the public is likely to accept the need to change, there seems to be a compelling case for switching to daylight saving time.

At present, Japanese power frequencies are set at 50 hertz in the East and 60 hertz in the West, using separate energy grids. There are only three conversion facilities for the whole country. This means that during an energy crisis in one area, very little surplus energy can be made available from the other. Shifting to a unified national energy grid would resolve this problem and ensure that Japan is better equipped to deal with internal energy crises. Given the scale and cost of unifying the grid, a mid-term measure could be to increase the number of conversion facilities.

The provision of accurate information in advance would ensure that key essential services, such as hospitals, could make adequate and timely preparations for blackouts.

Current proposals are to delay extending the rolling blackouts to more of Tokyo’s wards until the summer. However, going ahead now would increase public awareness of the need to conserve energy throughout the period of recovery from the crisis. Furthermore, it may be preferable to conduct the rolling blackouts during daylight hours in wards that are primarily residential.

Companies could be encouraged to reduce their energy consumption through schemes such as flexi-time, rescheduling of operating hours, encouraging staff to take summer holidays and so on.