Regulatory Reform of Public Utilities

Regulatory Reform of Public Utilities

The Japanese Experience

Fumitoshi Mizutani

Covering issues such as deregulation, privatization, organizational reforms, and competition policy, Regulatory Reform of Public Utilities provides a comprehensive summary of regulatory reforms in Japanese public utility industries.

Chapter 14: Private Sector Involvement

Fumitoshi Mizutani

Subjects: economics and finance, public sector economics


At both the national and local levels in Japan, industries in the public sector have several important goals: to foster efficient government, to restructure the government budget, and to reestablish trust in government. With these goals in mind, the Ministry of Internal Affairs and Communications issued new guidelines for use in the general inspection of public corporation management and the promotion of reforms among local public corporations. The basic concepts are summarized in a white paper published by the Ministry of Internal Affairs and Communications in 2006. First, it must be determined whether or not services currently provided by local public corporations are truly necessary. It is also necessary to examine whether or not it is the public sector’s role to provide existing services. Second, even if it is concluded that the public sector should indeed provide existing services, the white paper maintains that to the extent possible, ‘private sector style management’ should be promoted, with such strategies as the Designated Manager System (Shitei Kanrisha Seido), the Local Independent Administrative Institution Scheme (Chiho Dokuritsu Gyosei Hojin Seido), the Private Finance Initiative (PFI), and Comprehensive Outsourcing (Hokatsuteki Gaigu Itaku).

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