From recovery to revitalization~Outline of Special Zones for Reconstruction~

The Reconstruction Agency of Japan
September 2012

Framework for Stimulating Direct Investment

Tax breaks

Providing
subsidies forprivatecompanies
planning to invest

Reducing
corporate tax tozero per cent forfive years

Accelerating land‐
use restructuring
to create resilient
communities

DirectInvestment

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Tax breaks(1) Tax breaks to assist create employment in severely damaged areas(i) Special Depreciation / Tax Credit~March 2014

Machines /installations

Immediate
depreciation

Buildings andconstructions~March
2016
50%

25%

Selected option applied

Specialdepreciation

Tax credit（※１）~March
2014~March2016

Machines /installations

15%

Buildings andconstructions

8%(ii) Special Corporate Tax Credit
Designated corporations are eligible for tax credit equivalent to 10% of the combined
amount of salaries and other payments for the employees from severely damaged areas.
(iii) Taxation to Promote Establishment of New Business Facilities
New corporations are eligible forinclusion in deductible expenses of reserve
funds for reinvestments (to a maximum of
their revenues for designated five years)

Corporations are eligible for immediate
depreciation if they make reinvestment, etc.
(to a maximum of their balance of reserves
for reinvestments, etc.)* Designated corporations located in the Reconstruction Industrial Cluster Areas are allowed to2choose one of the arrangements (i), (ii) and (iii).

Tax breaks(1) Tax breaks to assist create employment in severely damaged areas(iv) Tax breaks for R&D
Corporations are eligible for
immediate depreciation if theyacquire assets for research anddevelopment activities.

Corporations are eligible for tax credit
equivalent to 12% (normally 8 – 10%) of theexpense for immediate depreciation of assets
for research and development activities.

* This tax break applies to the designated corporations located in the Reconstruction
Industrial Cluster Areas.
(2) Exemption from local tax or application of non-uniform tax rates
Designated corporations seeking the tax breaks in (1) are also eligible for local tax
exemption or reduced local tax rates for corporate enterprise tax, real estate acquisition tax
and fixed asset tax in accordance with the provisions of relevant ordinances of the local
governments, if the corporations acquire machines, buildings and other properties in the zones.

3Extended Reconstruction Industrial Cluster Areas

Reconstruction Industrial
Cluster Areas＝

City B(ⅲ) Tax breaks for new business(exemption from corporate tax for five years)

Daily transaction

City A

Areas that saw a large number of unemployment
and devastation in business infrastructure as aconsequence of the disaster

Contribution to theincreased employment
in City A through theeconomic activities by
the new businessestablished in City B

Designated by the municipals in their plans to besubmitted to central Government for approval

Town C

Reconstruction Industrial Cluster Areas intended to
strategically promote clusters in particular sectors.

Reconstruction Industrial
Cluster Areas

Commuting(ⅰ) Special Depreciation/
Tax credit for investment(ⅱ) 10% tax credit
for remuneration for
employees from thedamaged areas＝ (ⅳ) Tax breaks for
R&D(2) Exemption from local
tax or application of nonuniform tax rates

Contribution to the increased employment in City A through the economic activities
by the new business established in Town C which is within commuting range
Note: For City B or Town C to be included in the Reconstruction Industrial Clusters Areas, either of the following conditions
should be met:
・The Plan is developed by the prefecture that encompasses areas in City A, City B or Town C; or
4・The Plan is developed by City A jointly with City B or Town C.

Approved Plans for Special Zones for Reconstruction
As of 19th September 2012

◎ Aomori① Tax breaks and deregulation on green space ratio for manufactures② Compensation for the interest rate of loans◎ Iwate③ Deregulation on medical regulations for medical, elderly care and welfare④ Tax breaks for manufactures○ Kamaishi◎ Miyagi⑤ Deregulation on zoning restriction⑥ Tax breaks for manufactures⑪ Deregulation on medical regulations for medical, elderly care and welfare⑫ Tax breaks for information technologies○ Ishinomaki⑨ Tax breaks for service industries⑩ Deregulation on agricultural industries ⑬ Tax breaks for tourism etc.

○ Shiogama⑧ Tax breaks and financial incentives for tourism industries○ Sendai⑦ Tax breaks for agricultural industries◎ Fukushima⑭ Deregulation on producing and selling medical devices⑮ Tax breaks for manufactures⑰ Deregulation on medical regulations for medical, elderly care and welfare⑲ Deregulation on Defined Contribution Pension Law○ Aizu-wakamatsu⑯ Financial incentives for non-metallic processing industries

Tokyo○ Minami-Soma⑱ Deregulation on temporary building◎ Ibaraki⑳ Tax breaks for manufactures

5Grants for Reconstruction
Objectives: Support town-building undertaken on the basis of the reconstruction plans formulated by local
governments afflicted by the disaster, and accelerate reconstruction.
Features: The grants for reconstruction of areas severely damaged by the disaster are intended to enable their swift
and flexible implementation by choosing from the diverse projects those necessary to reconstruct areas.
All expenses will be borne by the central government (additional national subsidy and local allocation tax)
Budget Scale: Total of 2 trillion 289 billion Yen on Project BasisCore Projects
Diverse infrastructure projects* necessary for reconstruction of the afflicted municipalities areconsolidated into a single package “Core Projects”. (*40 subsidy projects of 5 Ministries)
Road projectCollective relocation project for disasterp
prevention

Earthquake resistance reinforcementp j for hospitalspproject
Project to install eco-friendly purification
tank

Agricultural area development project

Fishery village development project・・Land readjustment project

School facilities development project

Associated Projects
Projects proposed by municipalities to be implemented in connection with the Core Projects.
Maximum budget scale: up to 35% of the funds allocated for the core projects■ 1st Distribution
Approximately 305 billion yen (project basis), allocated to 59 municipalities in 7 prefectures■ 2nd Distribution
Approximately 316 billion yen (project basis), allocated to 71 municipalities in 8 prefectures■ 3rd Distribution
Approximately 181 billion yen (project basis), allocated to 56 municipalities in 9 prefectures

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Involvement of Private Sector for Reconstruction
Establishment of a New Service for Collaboration with Private Sector
1. Organization
 New organization for collaboration with private-sector for reconstruction establishedon 1st Apr 2012, “Unit for Collaboration with Private Sector for Reconstruction”.
 The staff members of the new unit comprise ; Japan Business Federation, Japan
Association of Corporate Executives, Japan Chamber of Commerce and Industry.
 New units in each Regional Bureaus of Reconstruction Agency established.
→ 20 officers in total (10 in Tokyo headquarters, 10 in regional bureaus)
2. Mission
 Provide technical support for collaboration with private sector in the afflicted
municipalities;
 Hold committees charged with each reconstruction project and provide necessary
support to relevant governments;
 Hold seminars and exhibitions to promote collaboration with private sector;
 Compile and release a list of FAQ and best practices of collaboration for reconstruction
with private sector in afflicted municipalities.

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Contact:【Contact】
Address ：〒107-0052
Sankaido-bldg, 1-9-13 Akasaka, Minato-ku, TOKYOTEL： +81-3-5545-7234, +81-3-5545-7365
e-mail: invest.tohoku@cas.go.jp【Website】
HP: http://www.reconstruction.go.jp/english/

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APPENDICES

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Framework of the Law for Special Zone for Reconstruction
Municipalities listed in the relevant legislation due to the damages they sustained can formulate Plans on theSpecial Zone for Reconstruction in pursuit of a package of special measures.
・Outline and strategic goals of the plans to be formulated by the municipalities
Basic Guidelines for the・Basic policy on the measures to be taken by the Government to meet the goals
Special Zone for Reconstruction ・Basic components to be included in the plans and procedures for approval thereof(decision by the Cabinet)・Special measures applicable to the municipalities in the Special Zones

Consultative body ofCentral and Local
Governments- established in eachprefecture within the regions
disrupted by the disaster- organized by the
Reconstruction Agency
to discuss proposals fromlocal authorities on special
measures(working groups may beestablished on municipality
basis)

Reconstruction Promotion Plan

Land Restructuring Plan

Plan to seek special measures on
deregulation, simplified procedures, tax
breaks and other special measures.

Plan to seek special measures onapproval/authorization and procedures
for land restructuring

Formulated by Prefectures alone or
jointly with municipalities. Private
enterprises are entitled to submit
proposals to local governments.

Formulated by municipalities alone
or jointly with Prefecture.

Approval by the Prime Minister- Public hearings, announcement anddisplay for public when necessary- Consultation for subsequent
agreement on the plans in themeeting on land restructuring

Disclosure of Plans

Add and/or enhance
special measures

・Deregulation and reduced proceduresfor such sectors as housing, industry,
town-building, medical services,and nursing care.
・Tax breaks to promote employment
and industrial activities
・Interest rate compensation for loanlenders

Special measures forland use restructuring

Plan for Funding
Reconstruction Projects
Plan to seek funding for projects(projects for reconstruction in areas
severely damaged by the disaster)
Formulated by municipalities alone or
jointly with Prefecture.

Submission to the Prime Minister

Reconstruction Grant to support
regional reconstruction

・40 projects for municipalities consolidated・Special permits granted needed for the into a single package as “core projects”
conduct of reconstruction projects
・Resources secured to enable flexible use
・ Unified contact for municipalities infor local governments
seeking approval/authorization
・Central government funds the・Creation of new types of project
reconstruction projects in entirety
to facilitate land restructuring
・Flexible implementation with simplified
procedures

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List of Approved Plans for Reconstruction Promotion
Prefe- Date ofAreas covered
cture Approval

Summary

Outline of the special measures

as of 19th September2012●Tax breaks (corporation tax, real estate acquisition tax, etc…)
Tax breaks andSoutheast 4【Scope】 Eco-friendly manufacturing, life science industry, electronics industry, environment
deregulation onmunicipalities
andrenewable energy industry, food-related industry, information service industry and retailing
2nd Marproportion of green①【Municipalities covered】 Hachinohe City, Misawa City, Oirase Town, Hashikami Town
in Aomoriareas forrequirements for proportion of green areas in constructing factories●Relaxed
prefecture
Aomorimanufacturers【Municipalities covered】 Hachinohe City, Oirase Town, Hashikami Town

Financial incentives(Compensation for ●Compensation for the interest rate of the loans to be provided to the enterprise for its plan to
6th June Misawa Citybuild freezing/refrigerating facilities
Interest rate ofloans)②●Deregulation on medical regulations for improving medical, elderly care and welfare
・Relaxed requirements for medical staff arrangements in hospitals【Areas covered】 Entire prefecture
Deregulation on
・Relaxed application of the regulation for medical welfare staff management for in-homemedical regulations
service・Relaxed application of the welfare staff management regulation for intensive care homes forfor improving
medical, elderly care the elderly
・Relaxed application of the welfare staff management regulation for long-term care healthand welfare
facilities
・Relaxed application of the requirements for buildings and facilities for pharmacies【Municipalities covered】 Costal 12 municipalities

9th Feb

Iwate
prefecture④

30th MarTax breaks for
manufactures,
Deregulation on
Iwate
requirements forprefecture
producing andselling medical
devices⑤

3rd Aug Kamaishi City

③

Iwate

Deregulation on
zoning restrictions●Tax breaks (corporation tax, real estate acquisition tax, etc.)【Scope】 electric industry, medical health industry, automobile industry, woodindustry, tourism, food industry and marine industry●Relaxed requirements for the experiences required of managers in the medical devices
manufactures and sales【Areas covered】 Entire prefecture●Relaxed requirements for zoning thereby enabling construction of commercial facilities in the
exclusive industrial zones【Areas covered】 Minato district

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Approved

Areas covered
Outline of the special measures
Listregionof Approved
PlanSummary
for Reconstruction Promotion
date⑥

9th FebTax breaks for major ●Tax breaks (corporation tax, real estate acquisition tax, etc.)
Miyagi【Scope】 Manufactures (automobile industry, electric industry, food industry, wood industry,
manufacturing
prefecture
medicalhealth industry, renewable energy industry, aerospace industry and marine industry)
sectors⑦nd

Tax breaks for
Sendai city agriculturalindustries

2

Mar●Tax breaks (corporation tax, real estate acquisition tax, etc.)【Scope】 Agricultural industry, renewable energy industry, R&D industry【Areas covered】 Costal area

Tax breaks for●Tax breaks (corporation tax, real estate acquisition tax, etc.)
tourism【Scope】 Sea transport service, food retail, lodging service and so on.
Financial incentives●Financial incentives (Compensation for the interest rate of the loans)for tourism and【Target project】 Construction of a new aquarium, marine industrial plants
marine industries⑧

23rd Mar

Shiogama
City⑨

23rd MarTax breaks for
Ishinomaki
Commerce-related
City
industries●Tax breaks (corporation tax, real estate acquisition tax, etc.)【Scope】 Commerce, tourist industry, medical health industry and ICT industry【Areas covered】 City central

23rd Mar

Deregulation on
Ishinomaki
Agricultural Land
City
Act

●Relaxed requirements for constructing storage facilities “country elevators” in the
Agricultural Land Act

Miyagi⑩⑪

10th Apr

Miyagiprefecture⑫

12th Jun

Miyagiprefecture●Deregulation of medical regulations for improving medical, elderly care and welfare
・Relaxed requirements for medical staff arrangements in hospitals
Deregulation on【Areas covered】 Entire prefecture
medical regulations
・Relaxed application of the regulation for medical welfare staff management for in-homefor improving
medical, elderly care service
・Relaxed application of the welfare staff management regulation for intensive care homes forand welfare
the elderly
Deregulation on
・Relaxed application of the welfare staff management regulation for long-term care healthproducing andfacilities
selling medical【Areas covered】 Costal 15 municipalities
devices basis●Deregulation on producing and selling medical devices basis【Areas covered】 Entire prefecture●Tax breaks (corporation tax, real estate acquisition tax, etc.)
Tax breaks for【Scope】 Information technologies (software industry, internet service, call center, BPO office,information
datacenter, design development industry, digital contents industry)technologies【Municipalities covered】 Costal 10 municipalities and the next 7 municipalities
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region⑬ Miyagi

Approved
Areas covereddate
27th July

Summary

Outline of the special measures

Tax breaks for●Tax breaks (corporation tax, real estate acquisition tax, etc.)
Ishinomaki industries relevant to【Scope】 Tourism, commerce, industry relevant to renewable energy or recycling
City
tourism and【Areas covered】 Areas in the Oshika peninsulacommerce
Deregulation on●Relaxed requirements for the experiences required of managers in the medical devices
Fukushima producing andmanufactures and sales
prefecture selling medical【Areas covered】 Entire prefecturedevices⑭

16th Mar⑮

20th Apr

Fukushima Tax breaks forprefecture manufactures⑯

20th Apr

AizuFinancial incentives●Compensation for the interest rate of the loans to be provided to the enterprise for investing
wakamatsu (Compensation forin non-metallic processing industries
CityInterest rate of loans

20th Apr●Deregulation on medical regulations for improving medical, elderly care and welfare
・Relaxed requirements for medical staff arrangements in hospitals
Deregulation on
・Relaxed application of the regulation for medical welfare staff management for in-homemedical regulations
service
Fukushima
・Relaxed application of the welfare staff management regulation for intensive care homes forfor improving
prefecture
medical, elderly care the elderly
・Relaxed application of the welfare staff management regulation for long-term care healthand welfare
facilities【Areas covered】 entire prefecture

Fuku
Shima
⑰

⑱

⑲

●Tax breaks (corporation tax, real estate acquisition tax, etc.)【Scope】 Automobile industry, electric industry, medical health industry, renewable energy
industry and so on.

Minami-Soma Deregulation on●Relaxed requirements for duration of temporary buildings
City
temporary building
Deregulation on
Fukushima
Defined●Relaxed application of requirements for defined contribution pension to facilitate opting out
3rdAugustof the pension scheme prior to a due date.
prefecture Contribution
Pension Law
27th July●Tax breaks (corporation tax, real estate acquisition tax, etc.)⑳

IbarakiPrefe- 9th Marchcture

Tax breaks for
Ibarakiindustries relevant to 【Scope】 Industries for next generation, automobiles as well as sectors relevant to construction,
electricity, machinery,food, fishery, logging, transport, tourism, commerce, etc.
prefecture new energy and13【Municipalities
covered】
13 municipalities
other sectors

Immediate Impact of the 3.11 Disaster

Earthquake Magnitude: 9.0
Casualties:
Deceased : over 15,800
Unaccounted: over 3,200
Injured: over 6,000
Evacuees:
Over 342,000

14Economic Damage:
16.9 trillion yen (approx. 211.3 billion dollars )Buildings, etc.
(housing, offices, factories, machinery,etc.)

approximately 10.4 trillion yen .
(130 billion dollars)

Lifeline utilities(water service, gas, electricity,communication and broadcasting
facilities

approximately 1.3 trillion yen(16.3 billion dollars)Social infrastructure(river, road, harbors, drainage, andairport, etc)

approximately 2.2 trillion yen(27.5 billion dollars)

Others(including agriculture, forestry andfisheries)

approximately 3.0 trillion yen(37.5 billion dollars )15

Damage Reduction

Japan’s swift response to the disaster contributed to minimizing
the damages(Courtesy of JR East)• Quake-resistant construction
and technology• Enhanced safety and earlywarning systems ontransportation• Disaster education andpreparedness16

Infrastructure and Transport Network Restoration

 National highways repaired in only 6 days
 Rail services resumed full operational capability within amonth
 More than 96% of scattered debris generated by thetsunami has thus far been cleared from residential areas.
BEFORE

AFTER

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Economic Recovery
 Japan’s economy has made a significant recovery to pre-earthquake
levels and continues to be stable
Real GDP : Changes from the previous quarter, annual rate

（％）
10
5
0

6.1

5.2

-5

-0.6

-12.3

Ⅱ

CY2010
CY2008

Ⅲ

-2.3

-14.8

actualconsensus
actual (before & after Lehman shock)

Ⅰ

-0.7

-6.8

September 15, 2008
Bankruptcy of Lehman Brothers

-15

7.4

7

-1.5

-4.6

-4.4

-10

-20

2.3

2.7

7.3

March 11, 2011
The Great-East Japan
Earthquake occurred

Ⅳ

Ⅰ

Ⅱ

CY2011
CY2009ⅢⅣ

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Outline of a framework for reconstruction
TIMEFRAME• 10 years for the reconstruction period (with concentration on the first 5 years for
speedy recovery)
MEASURESS TO BE IMPLEMENTED:• for recovery and reconstruction of the disaster-afflicted areas and restoration of lives ofaffected people• for areas closely connected with disaster-afflicted to be taken in co-ordination with theaforementioned measure• Nationwide disaster prevention and reduction that require urgent action
BUDGET SCALE (estimation, national and local governments)• Not less than 23 trillion in the next 10 years (19 trillion in the first 5 years)
SUPPORT FOR RECONSTRUCTION• Create “Special Zones for Reconstruction”• Establish easy-to-use grants for implementation of reconstruction plans, formulated by
local governments• Collaboration with the private sector for reconstruction

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Substantial budgetary commitment to revitalization
First Supplementary Budget(2 May 2011): 4.15 trillion yen (= 51.9 billion dollar)
•
•
•
•
•

Disaster relief and other measures
Removal of debris generated by the disaster
Public infrastructure projects
Loans in response to the disaster
Grants to local governments and other expenditures

482.9 billion yen(= 6 billion dollar)
351.9 billion yen(= 4.4billion dollar)
1.2 trillion yen(= 15billion dollar)
640.7 billion yen(= 8 billion dollar)
120 billion yen(= 1.5 billion dollar)

Second Supplementary Budget(25 July 2011): 1.99 trillion yen (= 24.9 billion dollar)••••

Compensation for damage caused by the nuclear accident
Support for people affected by the disasterReserve fund for recovery and reconstruction
Grants to local governments

275.4 billion yen(= 3.4 billion dollar)
377.4 billion yen(= 4.7 billion dollar)
800 billion yen(= 10 billion dollar)
545.5 billion yen(=6.8 billion dollar)

Third Supplementary Budget(21 November 2011): 12 .1 trillion yen (= 151.3 billion
dollar)•Reconstruction Support

11.73 trillion yen(=146.6 billion dollar)

FY 2012 Budget(5th April 2012): 90.3 trillion yen(=1.1 trillion dollar)•

Reconstruction Support

3.25trillion yen(=40.6 billion dollar)

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New Strategy for Revitalization 2012

The 2012 Strategy For Revitalization outlines mid-to-longterm targets for 2015-2020. It includes:

Creating $1.2 trillion of new market value and 4.24 million new jobs throughkey sectors such as green/clean tech, life sciences and other relatedindustries.



Promoting economic partnerships with overseas economies through trade
agreements.

Ending deflation and targeting an annual growth rate of 3% on averagethrough fiscal 2020.

Strengthening SMEs, promoting ICT, and further developing the financial
sector.

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Investment Opportunities in Japan

Innovation Hub: Japan has great potential to become aregional hub and a R&D center in AsiaBridge Nation: Japan plays a crucial role in connecting Asiawith the rest of the world
Large growth potential: huge market with the world's thirdlargest economy【Contact】
Address ：〒107-0052
Sankaido-bldg, 1-9-13 Akasaka, Minato-ku, TOKYOTEL： +81-3-5545-7234, +81-3-5545-7365
e-mail : invest.tohoku@cas.go.jp【Website】
HP: http://www.reconstruction.go.jp/english/

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