New Public Management in Japan andSoutheast Asian Countries:
A Magic Sword for Governance Reform?

Osamu Koike, Ph.D.
Professor of Public Policy and Administration
International Graduate School of Social Sciences
Yokohama National University

Paper presented at the IIAS/Japan Joint Panel on Public Administration,
Bologna, Italy, June 21, 2000.

SUMMARYAt the turn of the century, administrative reforms become a fad not only inadvanced countries but also in developing countries. In western democracies
a prevailing theme of administrative reform in the 1980s was a "small
government," backed by a dubious theory of "new conservatism." In the
1990s a driving reform idea was slightly transformed to what is called"reinventing government" (Osborne and Gaebler 1992). Not only bashing thebureaucrats, "new liberal" leaders advocated the reform of the governmentthat "works better and costs less" (Gore 1993). These leaders welcomed
managing tools from the private sector making the government moreaccountable for results. In some countries, such as the United Kingdom,
New Zealand, and Australia, reforms take on a more radical manner likeprivatization, market testing, contracting out, adopting the theories of public
choice and a "quasi-market." In the end, all these efforts are now covered
under the name of "New Public Management (NPM)."In developing nations, administrative reforms have also become crucial forpolitical leaders. Democratic forces have criticized a tyrannical"developmental state," once applauded for its contribution to economic
growth. In addition, international aid organizations request developing
countries to modernize their governance for effective use of development
assistance. Quite interestingly, proposed measures for "good governance"
contain some ideas of NPM such as "accountability" or "decentralization,"
which appears to be less easy to adapt even for the advanced countries. It isclear that New Public Management is somewhat effective for governancereform both in developed and developing countries. However, it is difficult, or
appears to be meaningless in some cases, to impose some measures of NPM
to a country without taking into consideration the political environment. As
for the Asian Pacific countries, in order to make NPM work, we would be
more successful promoting the exchange of information of publicmanagement through various channels.

Theoretical Ambiguity of the NPM
NPM is not an established theory but seems like a salad bowl of different
ideas for government reform. It will be able to sort through two broad
categories. The first approach attempts to change government structurefrom the centralized, hierarchical bureaucracies to become decentralized
small units that will be more customer-friendly. Reform prescriptions
include: market testing, contracting-out, splitting of the planning coreorganization and implementing agency, external evaluation of the agency
performance, etc. These measures have been thought out from the theoriesof "neo classical economics" and "new institutional economics." Theorists
assume that people can regulate a "wasteful" bureau of government by
putting them into competition with the private sector, or into the"quasi-market" (Ferlie et.al. 1996).
The second approach relates to the organizational change of the public sector.
It challenges the traditional Weberian theory of public administration. Thisapproach originates from business management improvements since the1980s. Two best selling books, "In Search of Excellence" (Peters andWaterman, Jr. 1982) and "Reengineering the Corporation" (Hammer andChampy 1993), have influenced public managers to adopt business successstories into their organizations. "Breaking through Bureaucracy" (Barzelay
1992) and "Reinventing Government" " (Osborne and Gaebler 1992) are themost influential books both for federal and local government managers in
the U.S. Reform measures includes the TQM, "reengineering," flattenorganization, program evaluation, performance pay, bench marking,
Management by Objectives, etc.
In summary, NPM includes many approaches, ranging from structuralreform to the improvement of an accounting system. Therefore, it becomes acatchy word for the world political leaders. However, we should note that
NPM is neither a first-aid kit nor a "magic sword" for government reform. It
contains different, even conflicting values. When we attempt to adopt somemeasures of NPM, we should distinguish which is adoptable and valuable toour government and which is not.

New Public Management in Japan
Japan has had a tradition of a "strong state" since the Meiji Era (Silverman1993). Though Japan transformed from the old regime to a democratic one
following the World War II, strong bureaucracies had survived to lead therecovery of the national economy. In the 1970s, the U.S. and European
countries criticized that the Japanese market had been unfairly closed toforeign capital. In 1981 the Government established the Provisional
Commission for Administrative Reform to "reconstruct government financewithout tax increases" and to prepare for the age of "globalization." The
PACR, chaired by Mr. Toshio Doko, who was a famous business leader,
proposed the overhauling of government and recommended the promotion of
deregulation, decentralization, and privatization (Wright and Sakurai 1987).
In 1985, the deficit-ridden Japanese National Railways was privatized into
seven independent companies despite strong opposition from labor unions.
Public opinion supported the idea of a business-like government. However,during the days the "cozy triangles" - politicians, bureaucrats, and businessgroups - were strong enough to ignore recommendations of the Reform
Commission (Koike 1995).
In the late 1990s, a reform-minded Prime Minister Hashimoto Ryutaro
established the "Administrative Reform Council" and he became thechairman of the Council. The Council adopted ideas of New Public
Management and proposed the following measures:- Creation of the Cabinet Office- Reorganization of central ministries and agencies- Transformation of national agencies to the independent administrative
corporations- Appointment of Deputy Ministers in each ministry- Decentralization- Civil service reform.

Creation of the Cabinet Office
The new Cabinet Office is a staff organization for the Prime Minister. It
coordinates governmental policies under the direction of the Prime Minister.
Some agencies and independent organs (the Defense Agency, the FinanceAgency, the National Safety Commission, etc.) are transferred to the Cabinet

Office. The law to establish the Cabinet Office passed the Diet in July 1999.

Reorganization of central ministries and agencies
Reorganization of the central body of the government was the highest
priority of Hashimoto Administration. Under the direction of the Prime
Minister, the Reform Council prepared a plan to reduce the number ofcentral ministries and agencies by half. Reduction will be achieved mainly
through the annexation of ministries and agencies. In addition, thegovernment has set a date to privatize the Ministry of Post andTelecommunication by 2003. In July 1999, the Reorganization Act passed theDiet. The new organizations of the central Government, which start inJanuary 2001, are shown in Appendix A.

Deputy Minister
To strengthen political leadership over the ministries, the government
introduced deputy-ministers in each Cabinet ministry to assist the ministerin place of the existing parliamentary vice-minister. A total of 22
deputy-ministers will be assigned to each Cabinet ministry. In addition, thegovernment created 26 "parliamentary aides" who deal with specificpolicy-making and planning under the direction of the minister. It meansthat nearly 50 political appointees plus 14 ministers (the Ministers of theState) will come into the administration (Koike 1999).

Independent administrative corporation
The government has transferred 80 government agencies to the Independent
Administrative Corporation (IAC). The list includes mint, printing, national
hospitals, national museums, and labs. In the IAC, an agency head preparesa mid-term performance plan and manages the budget provided by thegovernment. The status of the employees is divided into the two categories:
public officials and non-public officials. The primary purpose of IAC is "toseparate policy-making functions and policy-implementing functions and to
improve the efficiency and quality of services for the people by granting moreautonomy and responsibilities to corporations and also to ensure thetransparency of the operation (Kaneko 1999)." The most controversial issue
at present is a transfer of national universities to IAC.

Decentralization
Based on the recommendations of the Decentralization Promotion
Committee, the government revised related laws to decentralize national
authority and to allow more local autonomy. First, the Agency Delegation
Function System, which legitimized overall control of local governments by
the central government, was abolished. It will transform center and local
governments from a commander-obedience relationship to be more equal infooting. Second, it established third-party organs to solve intergovernmental
conflict. However, centralized intergovernmental fiscal relations have notchanged and this issue awaits further discussion (Koike and Wright 1998).

Civil Service Reform
In March 1999, the Civil Service System Deliberation Council submitted areport to reform the national civil service system. The Council proposed
reform agendas as follows: the revision of the entrance examination system;
introduction of merit pay principle; establishment of ethics; extension ofretirement; promotion of personal exchanges between the public and private
sectors, and so on. The items sound healthy; however, it is undeniable thatthe recommendations are increment and essentially Christmas tree-like.
Apparent through recent administrative reform, Japanese leaders seem tobe positive towards adopting NPM measures. However, it seems less evident
that political leaders really understand the meaning of a "customer-driven"or "result- oriented" government. For instance, the creation of giant
ministries seems to be distant from the idea of NPM that stresses tostrengthen accountability of public organization by the decentralization. In
the case of independent administrative corporations, expecting results ofservice improvement are unquestioned, while the government emphasizes
the downsizing of the central administrative machinery. We may say that it
is in a transitional period from a traditional bureaucratic state to thecustomer-oriented governance, however, the future prospect of Japan's
administrative reform remains uncertain.

Administrative Reforms in ASEAN Countries
Since the decolonization in the 1950s, underdeveloped countries had moved
toward the stronger governments to assist in the development of theirnations. In Southeast Asia, political leaders tended to depend much on
bureaucracies to tailor and enforce the national development plans. In theprocess of development, major industries were nationalized in thesecountries. However, productivity of nationalized industry tended to besecondary, where the political leaders utilized government corporations for
employment of political supporters.
After the oil crises in the 1970s, foreign companies rushed to Asia seeking tolower production costs. As a result, Southeast Asian countries achieved ahigh economic growth. This has been called the "Asian miracle" (Flynn 1999).
However, the more the countries developed, the more people demanded
democracy. As shown in the recent political changes in Philippines,
Indonesia and Malaysia, the old-styled authoritative regimes have allowed
more democracy and local autonomy.
Further, the government reform imperatives come from the out side. Since
the 1990s, international aid organizations like the World Bank and theInternational Monetary Fund (IMF) request recipient countries to improvegovernance for the effective use of development assistance, providing fundand experts for civil service reform and improvement of public management.
In Southeast Asian countries, demand for government reform became more
serious after the crash of financial markets in 1997. Agendas for government
reform in the developing countries range from the establishment offundamentals for governance to modernization as in the developed countries.
Reform strategies will include followings:- Fairness: rule of law, standard procedures, merit system in the civil service.
- Accountability: program evaluation, accounting and audit system,
decentralization.
- Credibility: responsible managers, information disclosure, citizen
participation.
- Efficiency: performance pay, Citizens' Charter, privatization,
contracting-out.
A serious problem is that they have to pursue conflicting values at the sametime. To establish a credible government, for example, it is necessary forleaders to disclose government information to the public. However,governments tend to hide information that might be advantageous toopposing forces. In pursuing value in efficiency through privatizing state
corporations, political leaders tend to prefer them to remain inefficient due
to fears of mass unemployment. As for the problems of an efficient
government, many countries take measures for anti-corruption, TQM, andthe civil service reform. However, governing parties are often less supportiveof civil service reform especially when they utilize political appointment tocontrol bureaucracies. In particular, decentralization and citizen
participation seem difficult where local ethnic groups demand local
autonomy. For leaders such reforms appear to reduce the centripetal force ofthe central government over the periphery.
Finally, we can say that it will be difficult and even risky to adopt the New
Public Management to the administrative reform in developing countries,
unless taking steps for establishing fundamentals of modern governance. It
is common for political leaders to rush to the catchy copies of reform tools.
Rather, they should invest more in the "capacity-building" of the statethrough the establishment of a fair political system and solid legal
foundations, and through the human resource development (Grindle 1997).

Transnational cooperation for governance reform
As mentioned above, NPM is not a magic sword. Rather, it will be effective
when it is customized for each political environment. Prior to thecustomization, we should establish a new operating system for governancebased on the principle of fairness, accountability, credibility, and efficiency.
For that purpose, it is rational to promote information exchange on
governance reform among the developed and developing states. For
instance, Japan's experience of privatizing public corporations would be alesson for the states that propose deficit-ridden state corporations. Further,positive use of transnational bodies seems very effective. Not only theInternational Institute of Administrative Sciences and IASIA, but also theutilization of regional organizations for the study of public management,
would be effective. In addition, personnel exchanges of management
experts among the countries will contribute to the development of publicmanagement. In Japan, the Japanese International Cooperation Agency(JICA) conducts a variety of training programs for public officials from thedeveloping countries. Yokohama National University launched a new"Legal Studies and Development Scholarship Program" for the students
from those countries in the process of economic transition. The objective of
the scholarship program is "to train individuals who will be in a position toassist in the smooth implementation of solid legal foundations appropriate
to market economies." We believe such transnational cooperation willcontribute to the progress of public management in this region.
References
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Flynn, N. 1999. From Miracle to Meltdown in Asia. Oxford University Press, Oxford.
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Getting Good Governance: Capacity Building in the public Sector of Developing
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Hammer, M. and J. Champy 1993. Reengineering the Corporation. HarperCollins, NewYork.
Kaneko, Y. 1999. Government Reform in Japan. Management and Coordination Agency,
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Gakubu Kiyo, No. 28.pp.105-113..
Koike, O. 1999. "Legislative Reform In Japan: Is the Deputy Minister the Answer?"
Paper presented at the SOG meeting held at Meiji University, 17-19 November
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Koike, O. and D. S. Wright. 1998. "Five Phases of Japanese Intergovernmental
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Osborne, D. and T. Gaebler 1992. Reinventing Government. Addison-Wiley, Reading.
Peters, T. J. and R. H. Waterman Jr. 1982. In Search of Excellence. Warner Books, NewYork.
Silverman, B. 1996. Cages of Reason. University of Chicago Press. Chicago.
Wright, D. S. and Y. Sakurai 1987. Administrative Reform in Japan. Public

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Contact: Osamu Koike, Ph.D.
79-4 Tokiwadai, Hodogaya-ku, Yokohama City, JAPANTel & Fax: +81-45-339-3642
E-mail: koike@iblaw.ynu.ac.jp
Do not quote without author's permission.

Ministry of Public Management,
Home Affairs, Posts andTelecommunications

Security Council of Jap

Postal Services Agency

Cabinet Legislation
BureauFire Defense Agency
National Personnel Auth
Fair Trade Commission
Cabinet Secretariat

Environmental Disputes
Coordination Commission(Basic strategy)

Ministry of JusticeCabinetNational Bar Examination
Administration Commission
Public Security
Examination Commission

Cabinet Office
Ministers of Statein charge of
specific issues
・Okinawa andNorthem Territories
・Other areas of issues
Council on
Economic andFiscal Policy, etc．

Public Security
Investigation Agency
Ministry of Foreign Affairs
Ministry of Finance
National Tax Administration A( Interdepartemental
coordination andplanning，honors, official
institutions, etc.)
Imperial
HousehoAgencyMinistry of Education, Culture,
Science andSports,Agency for Cultural Affairs
Ministry of Health, Labor and W
Central Labor Relations Comm
Social Insurance Agency
Ministry of Agriculture, Forestry
and Fisheries
Food Agency
Forestry Agency
Fisheries Agency
Ministry of Economy, Tradeand Industry
Agency of Natural
Resources and Energy
Patent Office
Small and Medium
Enterprise Agency
Ministry of Land，Infrastructure
and Transport
Labor Relations Commission
for Seafarers
Maritime Safety Agency
Marine Accidents Inquiry Age
Meteorological Agency
Ministry of Environment
Defense Agency (Ministerial le
Defense Facilities
Adoministration Agency
National Public Safety
Commission (Ministerial level )National Police Agency
Financial Supervision Agency

Appendix A
National Government in 2001