Meanwhile, the private sector has been assisting in the reconstruction process by providing emergency supplies, donations and a wide range of support facilities and equipment; by supporting employees who have volunteered; and by assisting in the emergency restoration of industrial facilities. The national and local governments have undertaken major reconstruction efforts in the affected areas through a variety of avenues, including a hastily enacted second supplementary budget for FY1994, tax relief and a town plan covering urban redevelopment projects in 16 wards covering 250 hectares. Despite these comprehensive efforts, the level of anxiety among survivors is rising once again due to growing concerns about how and when local industry will recover. This is a complex question, many aspects of which remain unanswered.
The regeneration of any area devastated by a major disaster begins with the reconstruction of its sources of economic vitality _ its business community. Small and medium-size enterprises, as well as major corporations in the Hanshin/Awaji region, are facing significant challenges in reconstruction. Inoperable industrial plants and closed businesses will inevitably lead to a chain of bankruptcies throughout the region. Furthermore, the disaster has prompted many firms to shift their production facilities out of the area, leading to concern about a hollowing-out of local industry. Given this unfortunate reality, local government must draft and implement medium- to long-term master plans for industrial revitalization, while the national government must provide support, on a massive scale, to all companies, through tax relief and financial support, supplemented by sweeping deregulation and financial support for reconstruction of both public and private harbor facilities.
In light of these requirements, this proposal, which is Keidanren's second list of suggested disaster relief strategies, presents a general policy position, as well as a list of industrial revitalization initiatives to be implemented in the disaster area.
The government should also provide assistance to all sizes of companies to speed up the disposal of building debris, which is a prerequisite to reconstruction of the disaster area and will help reduce the burden placed on the private sector.
The Japan Development Bank has introduced low-interest loans with annual interest rates of 3.65 percent for the first five years, for public infrastructure, such as electricity, gas and railways. The same low-interest financing should be made available for private sector facilities, such as commercial, distribution, manufacturing and harbor facilities, which now pay a rate of 4.55 percent for the first 5 years.
The introduction of interest supplementation, for instance, through the Industrial Investment Special Account or the Special Account for Promotion of Electric Power Resources Development, should be given top priority.
Taxation relief strategies, which extend no further than emergency measures at present, should be expanded to promote reconstruction of businesses in the disaster area. The following proposals should be considered:
A FY1995 supplementary budget, discussed later in this text, should be formulated and adopted as soon as possible, and should include a range of measures to support the reconstruction of industrial infrastructure and the revitalization of industry in the disaster area.
The government's first task should be to obtain the necessary funds by reducing expenses through resolute administrative and financial reforms, and by postponing unnecessary or non-essential projects. If further funding is required, the government should not hesitate to adopt a flexible approach to issuing national bonds.
The national government and relevant local governments should greatly expand current subsidies for modernization and the upgrading of distribution systems, in support of self-help efforts by local stores and businesses.
Specifically, with respect to regulations regarding public safety and security, special measures, such as simplified notification and independent inspection and security procedures, should be approved in order to speed the process of reconstruction of industrial facilities.
The regulations governing industrial land use under such laws as the Act Concerning Industry Restrictions, the Factory Location Law and the Industrial Relocation Law, should be revised in order to encourage new research and development industries to locate in the disaster area, and prevent an exodus of existing firms _ and the consequent hollowing-out of the industrial base.
The reconstruction and preservation of homes, and related social amenities, is also essential to the preservation of jobs. Public sector agencies should be encouraged to build high-quality rental housing and private sector subsidies should be provided for residential housing development, and construction of owner-occupied dwellings and company housing.
Given that the stricken area itself boasts a wealth of advanced technological infrastructure and human resources, strategies that promote new high-tech industries should be given top priority, particularly the establishment of a high-tech incubator and dedication of the necessary funding.
At the same time, prompt reconstruction of privately owned harbor facilities is vital to the overall restoration of the functioning of the harbor and government funding, and other subsidies should be made available as soon as possible. Temporary wharves and jetties should be built immediately to enable local companies to contribute their resources, knowledge and technology to restoration of the harbor.
Finally, one pivotal aspect of harbor restoration is the complete overhaul of regulations governing the use of harbor land and facilities, which will facilitate the construction of major harbors in the cities where harbor-related industries develop naturally.
It is now clear that diversifying and upgrading the modes of transportation and communications are vital to the safety and disaster preparedness of the nation as a whole. Therefore, the government must adopt a comprehensive approach to the improvement of transportation and communications infrastructure, rather than simply aiming to restore what was destroyed. This comprehensive approach must be seen as central to an economic recovery led by domestic demand.
The disaster has graphically illustrated the need to incorporate advanced disaster preparedness and relief into town planning. The reconstruction of Kobe and these regions should serve as a model of how this kind of preparedness can be put into practice. To this end, local governments should immediately formulate medium- to long-term reconstruction programs that faithfully reflect the interests of the affected residents and businesses, while the national government should provide its complete support. In particular, land use policies should be drastically revised while expanding publicly owned land holdings, in a new approach to urban and regional development that will stimulate economic activity in businesses affected by the disaster.
The national government must take heed of the lessons to be learned from this major earthquake. It should work to minimize the personal and material damage experienced by our citizens, and also carry out a wide-ranging investigation, covering everything from strengthened Cabinet powers to deal with disasters, to new organizations to assist the victims of these disasters. The earthquake has demonstrated the value of cooperation, particularly the link between the local governments and volunteer organizations. In light of these lessons, the concept of developing a public-private sector entity should be thoroughly explored.
Keidanren hopes that these proposals will be seriously considered and discussed by the Council for the Reconstruction of Hanshin/Awaji, an advisory body to the prime minister charged with developing a set of recommendations on strategies that should be undertaken by the national government.