4, 03. 2006
The "three laws concerning urban development" are due to be revised, and it will become difficult for large retail stores to expand to suburban areas. This will be a big turning point in Japan's administration over the distribution business. What's behind all this about the revising of the laws by the Koizumi government which strongly advocates deregulations?
Where are large-scale retail stores headed for?
Of the "three urban development laws" that are aimed at invigorating the central parts of cities, the law concerning city planning and the law concerning the invigorating the central urban areas are to be revised during this year's Diet session. The revised laws are expected to be put into force as early as in fiscal 2007 which will begin in April 2007.
With the revision, control will be tightened on the opening up of new branches of such business facilities as large-scale retail stores that cover an area of more than 10,000 square meters each, movie houses, amusement places and exhibition halls. Currently, the opening of branches of large-scale retail shops in suburban areas, for example, are free in principle. By placing tighter controls on such opening, the revision is intended to give rise to development projects in the central parts of cities.
Triggered by the Japan-U.S. Structural Impediments Initiative talks (SII) conducted in the mid-1990s, Japan's administration over distribution business has moved continually toward deregulation all these years. Motoya Okada, president of Aeon Co., Ltd., the largest Japanese retail group whose retail chain consists mainly of shopping centers in suburbs, says that Japan's distribution business would go into a dark age. Excessive control might violate the constitution (because it would constitute an infringement of the people's right of property ownership), he says. His remarks apparently reflected his view that Japan's distribution business lost its competitiveness in the past when severe restriction was placed on opening of newshops.
Landslide Victory of LDP, Komeito Determined the Move
Negative opinions were heard in the industrial world toward the end of last year about the control over the new opening of large-scale retail shops. In Japan new large stores are constructed mostly in lots vacated by factories which are moving out to overseas. There are accelerated movements of the Japanese manufacturing industry toward constructing new factories overseas. The government control over the large-scale retail shops being built in suburbs, therefore, would deal a negative blow to the industry which would become unable to find firms to take over their old factory lots.
As the LDP and Komeito, both of which pledge to take measures to revitalize urban areas, won the land slide victories in the general elections held in September last year, however, the move concerning the control over the new opening of large-scale retail shops has been more or less determined. In the industrial world, there was not a consensus view about the move as the department stores which are mostly doing business in the central parts of cities turned their stance to back up the government move. It was politically settled in the end by shelving the bill for the amendment of the law governing the opening of large-scale retail stores, one of the three laws that stipulate controls from the environmental aspects.
As a result of the deregulation that continued for the past 10 years, it could be said that Japan has become the country where regulations are most relaxed in the world as long as commercial activities are concerned. Under the policy of the Koizumi government to privatize all that can be privatized, a fast progress has been made in the process of deregulation in Japan. But side effects of such move can now be noticed.
Government Offices, Hospitals Moving Out
In Japan, central parts of cities have been impoverished since mid-80s. The so-called "shutter streets" that are lined by shops whose shutters are pulled down are expanding in the shopping districts of cities. The infrastructure functions, such as government offices and hospitals have moved out to suburbs. In the rural areas, on the other hand, shopping centers are appearing one after another. "Artificial and confined towns" have been built here and there, and this is more noticeable in the local districts.
The opening of large-scale stores is becoming a social problem also in Europe and North America. In the United States, each state has its zoning regulations. In Britain also, the setting up of a new large-scale store is severely regulated in reality by ordinances.
If large-scale stores keep on moving out to suburbs, it will invite disorderly expansion of city functions and it will become necessary to make new investments in the construction of road networks and water supply and sewage systems. Another problematic aspect facing Japan is the population decrease the country is experiencing ahead of most other countries in the world. The question of whether it would suffice to cope with the changing social structure in Japan only by dealing with the market mechanisms bears increasingly grave implication.