Global Conference on the International Network of Disaster Studies
in Iwate, Japan "Iwate Conference"

Proposing/Implementing Key Measures for Industrial
Recovery from the Great East Japan Earthquake

2018.07.18
Tohoku Bureau of Economy, Trade and Industry,
Promotion Office for Reconstruction from Great East Japan Earthquake

Overall condition of the Tohoku Region1Overview of the Tohoku Region(1)2Overview of the Tohoku Region(2)Total area[2016]
Total population[2015]
No. of employed persons[2015](Primary industry)(Secondary industry)(Tertiary industry)
GRDP[FY 2014](Primary industry)(Secondary industry)(Tertiary industry)
No. of business establishments[2016]
No. of employees[2016]
Value of manufactured goods shipped[2014](Foodstuffs)(Electronic parts, devices and electronic circuits)(Transportation equipment)(Information and communications electronics equipment)

Wholesale sales value[2013]
Retail sales value[2013]
Department store／supermarket sales value[2016](Department stores)(Supermarkets)
Convenience store sales value[2016]
New passenger car registrations[FY 2016]
Housing starts[FY 2016]
Value of public works contracted[FY 2016]
No. of factory locations acquired[2016]

Percentage of thetotal population: 7.1%

(Note) The number of employed persons is based on the 2015 Population Census(the Ministry of Internal Affairs and Communications)

3

The Great East Japan Earthquakeʼs impacts on
Tohokuʼs economy

4Damage in the Tohoku region caused by the Great East Japan Earthquake
The magnitude 9.0 earthquake that struck off the coast of Sanriku at 14:46 on March 11, 2011,
was the most powerful ever recorded in Japan, and the compounded effects of the massive
tremor and the subsequent tsunami, nuclear power plant accident, and power supply
constraints caused far-reaching and tremendous damage to SMEs.

Date
The
maximumseismic
intensity

The
Earth
quake

March 11（Fri） 14:46

Scale of earthquake magnitude 9 earthquake
Tsunami warning aftershock 344（over magnitude of 4）

Aomori , Iwate , Miyagi , Fukushima Prefecture
Flooding over an area of 521km2 in 42 cities

Kurihara City,
Miyagi Pref.

The Disaster Relief Act was invoked in 130 cities,4 prefecture

seismic
centerDead15,894

Missing persons 2,546

DamageEvacuees

470,000⼈（during peak 2013.3.14）

Gross amount of the loss （16.9 trillion ）（estimated）※ In the Great Hanshin Earthquake 9.6 trillion（estimated）、Dead 6,434

Distribution of seismic intensity
5

Ofunato City in Iwate Prefecture6

Miyako City in Iwate Prefecture
Before the Great East Japan Earthquake

After the Great East Japan Earthquake

7Impact on regional economies by the Great East Japan Earthquake＜Trend of industrial production＞
・The March 11 earthquake caused Tohokuʼs index of industrial production（IIP） to fall far more than the national index in March 2011. Particularly in
Miyagi prefecture due to many companies located along the coast. IIP was
rapidly declining.
Trend of index of industrial production

110.0（2005＝100）

100.0

95.2
93.5
90.6

90.0

90.4

82.7
80.0
National
70.0

73.9

Tohoku Region

64.2

Iwate Pref.

60.0

64.6

93.5 Tohoku Region
90.6 Iwate Pref.
73.9 Miyagi Pref.
90.4 Fukushima Pref.

59.5
Miyagi Pref.

50.02012 Jan.
95.2 National

Fukushima Pref.
43.9

40.0
Oct.

Nov.
2010

Dec.

Jan.

Feb.

Mar.

Apr.

May.

Jun.

Jul.

2011

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.
2012

8

Impact on regional economies by the Great East Japan Earthquake＜Trends in active opening rate＞

・After the Great East Japan Earthquake, shortage of workers
become a serious problem in the affected areas .
1.8
Tohoku Region
1.6
1.4
1.2

Aomori Pref.
Iwate Pref.
Miyagi Pref.
Fukushima Pref.

1
0.8
0.6
0.4
0.2
0
Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Dec. Dec. Dec. Dec. Dec.
2010
2011
2012
2013 2014 2015 2016 20179

“Restoration and maintenance subsidy Project for
Facilities of Small and Medium Enterprise Groups”（SMEs group subsidy）

10

Designing of SMEs Group Subsidy
In the areas affected by the Great East Japan Earthquake , many
companiesʼ production facilities and equipment were damaged. This hada significant additional impact on their supply chains and the Japanese
economy as a whole.
We found that an effective approach was to prioritize support for thefunctional recovery of corporate networks playing particularly importantroles in communities.
Intensive application of policy resources to groups of companies that are
the core of local economies, focusing on industrial networks and theability to absorb employment, centered on the following.

In June 2011 the national and prefectural governments joined
together in creating the SMEs Group Subsidy designed to promote therecovery and reconstruction of disaster-hit communities by subsidizing
part of the recovery costs for the purpose of maintaining or rebuilding
commercial districts that support local communities and local
infrastructure.
11Reference）The four key requirements for the groups
SMEs group subsidy has four key requirements for the groups(1) an industry cluster that is important to the region in terms of thebreadth of its business dealings;(2) made up of a core company that occupies an important rolein the region from the perspective of employment and that companyʼs
peripheral companies;(3) a corporate group that makes up an important supply chain for theJapanese economy;(4) a leading regional retail precinct that is indispensable to the local
community;（Type shopping districts）

12

Reference）SMEs Group Subsidy system
Introduced measures whereby the national government provides a one-halfsubsidy and the prefecture provides a one-fourth subsidy for the equipment andfacilitiesʼ restoration and preparation when a group comprising of multiple SMEs
prepares a restoration plan which is certified by the prefecture.

SMEs Group①③① submit restorations plan to prefecture② Review Board gives certification and notice⑥②③ performs a subsidy④ performs a subsidy

Prefecture⑤ Review Board, Grant Notification④⑥ Grant Notification⑤

Tohoku METI
13

Reference） Number of subsidized companies
・By the end of FY2017, 9764 SMEs had been approved for the Tohoku Region.
(Aomori Prefecture,208 Iwate Prefecture,1478 Miyagi Prefecture, 4127 Fukushima
Prefecture,3,942)
・Total amount of subsidy is 480 billion ( Government provides only )・Amount of subsidy has been on a decreasing trend since its peak in FY2011,FY2012.
・But in affected areas, many other companies need the subsidy.
(users)(100 million)
2,500

6,000
2,107

4,822

5,000

2,000
1,739

4,000
1,500

1,405
1,159

1,000

3,000

2,766
2,000
719

500

262

175

473
200

133

542
282

188

145

320
97

1,000

144
66

44

0

0
平成23年度FY2011

平成24年度FY2012※Only in Tohoku Region

平成25年度FY2013

平成26年度FY2014

平成27年度FY2015平成28年度FY2016

平成29年度FY201714

４ major changes in SMEs Group Subsidy
FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018

H23FY

H24FY

H25FY

H26FY

H27FY

H28FY

H29FY

H30FY

2011.6 SMEs group subsidy to begin① Simplifying the budget extension and subsidy renewal procedures( since 2012.11)② Enhanced support of “TYPE shopping district ” ( since FY2013 )③ Enhanced support for soaring construction
contract prices (since 2014.7)④ Enhancement of advances

into new business fields
15

① Simplifying the budget extension
and subsidy renewal procedures【 Background 】
・In affected areas , because of construction delays, many subsidized
projects remain incomplete at the end of the fiscal year.
・Additionally, the budget extension or subsidy renewal procedures areoverly complicated.
・Since FY2012, Ministry of Finance notified the GOJ and the public of the plan tosimplify the budget extension procedure.
・Additionally, in case where subsidized projects are not completed before thedeadline of the subsidy due to unforeseen circumstances （second extension）, a
subsidy is to be granted anew.
Conventional system
FY2011
Grant notification

FY2012First
extension

FY2013
Secondextension
FY2014
Grant anew

Present system

FY2015First
extension

FY2016
Secondextension16

② Enhanced support of “TYPE shopping district ”【 Background 】
・The environment faced by SMEs was changing dramatically, as
exemplified by the moving away from the affected areas．
・Supporting the restoration of single shops was not attractive to shopping
districts.

To make attractive shopping districts in affected areas, we have enhanced
support for “ TYPE shopping districts” since FY2015

・Subsidies were provided for the cost of construction of shared stores, parking,street-lights, security cameras and so on.
・Permission changes of business under certain conditions in case of lack of tenants
・Additionally , provided for the cost of “recovery fairs” to restore prosperity todamaged shopping districts.
17

③ Enhanced support for soaring construction contract prices【 Background 】
Due to the lengthening land readjustment project, construction and othercosts had surged, though companies in affected areas had not undertaken
restoration works.

The then Minister for Economy, Trade and Industry, Mr. Motegi,gave concrete instructions for solutions to the office when heinspected affected areas in Fukushima ,2014.7.3
In addition, some points were discussed.

◆Scope of objects to be supported◆Amount of subsidy◆How to support SMEs that had completed their restoration projects
18

④ Enhancement of advances into new business fields【 Background 】
・According to the Group Subsidy Questionnaire Survey in FY2014,many
companies have rebuilt their facilities and equipment, but have struggled
to reopen sales channels that were lost after the disaster, and sales
remain down on pre-quake levels.
・In the four years since the Great East Japan Earthquake, the businessenvironment had transformed.

・We provided assistance in FY2015 to companies seeking to enter newlines of business after losing business partners and customers due to long
delays in recovery and finding themselves unable to restore theirbusinesses to pre-disaster levels.
In addition, some points were discussed◆Scope of objects to be supported◆Amount of Subsidy◆How to support planning new business

19

About the Subsidy Program for New Business
Establishment in Disaster-Affected Areas
towards Employment Creation

20

Subsidy Program for New Business Establishment in the Areas Recovering fromTsunami and Nuclear Disaster towards Employment Creation (for manufacturing)<Background> In the municipalities affected by the Tsunami, existing industrial parks wereallocated as land for provisional housings.
 After the Great East Japan Earthquake, the number of companies decreased
significantly.
Kesennuma City, Miyagi Prefecture（－３３％）, Ishinomaki City, Miyagi Prefecture（－３５％）,
Kamaishi City, Iwate Prefecture（－２５％）, Rikuzentakata City, Iwate Prefecture（－４７％）※Source: Economic Census(2009,2012), Statistics Bureau, Ministry of Internal Affairs

 Even companies recovered from the Great East Japan Earthquake are facing
challenges in terms of marketing channels
For industrial reconstruction, we need…

①promoting new business establishment②employment creation③Government support
including land acquisition

Government in May 2013 created the Subsidy Program for New Business
Establishment in the Areas Recovering from Tsunami*¹ and Nuclear Disaster*²
towards Employment Creation.
＊1 the Areas Recovering from Tsunami : Aomori Prefecture, Iwate Prefecture, Miyagi Prefecture and Ibaraki Prefecture＊2 the Areas Recovering from Nuclear Disaster : Fukushima Prefecture21

Overview of the Subsidy Program for New Business Establishment in the Areas
Recovering from Tsunami and Nuclear Disaster towards Employment Creation
Subsidy objects
Private sector businesses establishing new business in Subsidized areas※Excluding restoration project※At the beginning of the system

Subsidy facilities① Factories（for Manufacturing ）② Logistics facilities③ Laboratories（for Manufacturing）④ Call centers, date centers, and similar facilities（for data processing and information services or Internet-based services）⑤ Other facilities that a prefectural governor determines necessary

22Subsidy Program for New Business Establishment in the Areas Recovering fromTsunami and Nuclear Disaster towards Employment Creation(for commercial facilities)<Background> Enhancement of the subsidy system was required because of the following
points.
①Relocation assistance for temporary stores and retail precincts to be restored②Recovery of function in commerce/service sectors③Targeting not only companies affected by the Tsunami and Nuclear Disasterbut also companies leading reconstruction of retail precincts

Subsidy Program was amended so that it enables to …
 establish commercial facilities by municipalities leading restore
commercial functions
 provide systematic assistance to companies as well as to municipalities
by creating a government foundation23

Transition of the Subsidy Program for New Business Establishment in the Areas
Recovering from Tsunami and Nuclear Disaster towards Employment Creation

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
The Subsidy Program for New Business Establishment in the Areas Recovering fromTsunami and Nuclear Disaster towards Employment Creation(for manufacturing industry)
The Subsidy Program for New Business Establishment in the Areas Recovering fromTsunami and Nuclear Disaster towards Employment Creation(for commercial facility/private establishment)

The Subsidy Program for New Business
Establishment in the Areas Recovering fromTsunami and Nuclear Disaster towards
Employment Creation(for commercial facility/public)

The Subsidy Program for Industrial Location and
Job Creation to Support Independence and a
Return to Recovering Areas(formanufacturing/service industry)

The Subsidy Program for Industrial
Location and Job Creation to Support
Independence and a Return to Recovering
Areas(for commercial facility)

SMEs Group Subsidy
Differentiate into a system specialized for the nuclear disaster affected area24

Government Support for creating employment
 This program requires companies using subsidies to create
employment according to their basic investment.
 On the other hand, the active opening rate has remained on a rising
trend after the Great East Japan Earthquake (refer to p.19), causing
difficulty in creating employment.
 Sometimes this condition is too strict for companies to use subsidies,though itʼs also difficult to change regulation in order to secure
employment.

Government has had a measure of success by …
 hosting seminars on securing employment
 organizing matching projects to encourage job seekers to jointhese companies⇒And it is necessary to continue such government support.
25

Examples of support for creating employment by the government

efforts

contents（１）
Advisory

Individual visits , information provision , formulation action
plan

（２）
SeminarCreating employment know-how , introducing successstories（３）
Establishingconsultation booths

Establishing employment consultation booths , information
provision

26

In Conclusion
・SMEs group subsidy is the first system designed to promote therecovery and reconstruction of disaster-hit private enterprises.
・In the seven years since the unprecedented devastation of the Great
East Japan Earthquake, revisions have been made to existing assistanceprograms and new programs have been created and implemented in linewith the wishes expressed by companies, local governments, etc. The
approaches taken in dealing with the Great East Japan Earthquake havealso been utilized effectively in other disasters, e.g., Group Subsidy
offered in Kumamoto and Oita Prefectures following the April 2016
Kumamoto Earthquake.
・It is practically impossible to envision all of the phenomena that could
occur during future disasters and then design programs around these,
so it is always the case that the national government needs to work inregular and close cooperation with local governments and aidorganizations under normal circumstances as well, responding swiftlyand flexibly to any contingencies that arise.
27

Sightseeing guideTohoku is beautiful , fun , delicious

28

“Hachinohe Sansya Taisai”

Hachinohe City , Aomori Prefecture
29

“Koiwai-Snow-Festival”

Shizukuishi-Cho , Iwate Prefecture

30

“Sansa-Odori”

Morioka City , Iwate Prefecture31

“Sendai Tanabata-Matsuri”

Sendai City , Miyagi Prefecture
32

“National Fireworks Competitions/ Omagari Fireworks Festival”
Daisen City , Akita Prefecture
33

“Yudono-san” Tsuruoka City , Yamagata Prefecture34

“Hanami-yama” Fukushima City , Fukushima Prefecture35

36

Tohoku region boasts various sake,agricultural,
forestry and fisheries products, traditional crafts,
historical and cultural heritage, festivals andother tourist resources. Utilizing these rich andunique local resources, a string of new
industries and initiatives are emerging in theaffected areas as they continue to make their
way toward recovery. We invite you to visit
Tohoku and soak in the regionʼs enormous
appeal while also observing firsthand the steadyprogress which Tohoku is making toward
recovery.

I do hope you will continue to support Tohoku
and visit again.
Thank you very much for your kind attention.

END