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New Industrial Promotion Policy for Cosmopolitan City Formation

Based on the "Report by the Committee of Industrial and Economic Promotion and Deregulation Study"

Okinawa Prefectural Government

4th November, 1997

I. New Industrial Promotion Policies

1. Basic Understanding

Okinawa's problems in relation to the promotion of industry include the limited availability of land due to the existence of vast U.S. military bases, delayed improvement of locations for industrial development as a direct result of having been excluded from various post-war industrial promotion policies, and comparatively high transportation costs because of its geographical distance from other parts of Japan and being a prefecture of many relatively small islands.

The industrial promotion of Okinawa has been relatively slow due to the above factors, and relatively weak economical structure which depends largely on mainland Japan still remains. Okinawa is in economically critical condition since Okinawa's per capita income remains the lowest in Japan and the unemployment rate is two times as high as the national average.

Other economic factors include the reduction of public investment and a decrease in base-related income which is a result of the consolidation and reduction of U.S. military bases in Okinawa. Thus, it is feared that further economic sluggishness and decreased job opportunities will worsen.

On the other hand, Japan's present economic condition, including an industrial migration to foreign regions and rapidly growing neighboring countries in Asia, should be taken into consideration for meeting the needs and adapting to changes of the times, such as advanced internationalization and information technology so that Okinawa's self-supportive development will be realized.

Thus, it is necessary to develop new industrial promotion policies which utilizeOkinawa's regional characteristics and resources in a positive way. Improvements designated to attract domestic as well as foreign industries need to be expanded by introducing a free trade zone with tax incentives, focusing on deregulation, and constructing an infrastructure which includes an international airport, harbors, and information and communication facilities.

The development of industrial promotion should be carried out based on an understanding of the present system and economic condition and in harmony with the policy of the "Okinawa Prefectural Industrial Creation Action Program" whose goal is to form the core industry of Okinawa so that synergism will be generated. The result of such development includes the expansion of markets in the Asia and Pacific regions for industrial economic activities, the creation of new industries, ensuring employment, and stimulating the local economy for stable self-supportive development.

In reviewing Okinawa's present economic condition, which is characterized by relatively low industrial and economic indicators and changes of domestic as well as foreign trends, it must be realized that now is the time to resolve Okinawa's industrial and economic problems in order to open the door to future success.

Based on the understanding of the above paragraphs, new industrial promotion policies for the formation of a cosmopolitan city shall be implemented.

2. General Direction of the Policies

Industrial Promotion Policies shall be directed to develop new industrial promotion based on the concept of "exchange and cooperation" with characteristic features of Okinawa contributing to self-supportive development of Okinawa and economic vitalization of Japan. In addition, unique local industries shall be created in Okinawa.

Policies to introduce systems for preferential treatment and to construct a related infrastructure shall be implemented based on the following:

(1) New Turn for Free Trade Zone

The free trade zone in Okinawa should be effectively utilized in order to create new industries and vitalize existing industries by stimulating trade and investment.

The formation of an international economic exchange hub, where unrestricted vital economic activities can take place by extensively expanding and reinforcing the system and boundaries of the existing free trade zone, and the creation of a truly affluent society should be considered the objectives.

The expansion of the market in mainland Japan and neighboring Asian countries, rather than being dependent only on the market in Okinawa, is needed for the development of manufacturing industries and transportation businesses in Okinawa.

Thus, it shall be designed to reinforce the production of goods by various manufacturers through promoting the export industry and creating the import or processing industry based on a new concept of the advancement of the free trade zone.

By taking advantage of the geographical location, improving the transportation system, and attracting the information and communication industry, an international hub for trade and exchanges should be established in Okinawa.

Furthermore, the tourism industry shall be promoted by establishing tax-free shops at sightseeing locations for domestic as well as foreign visitors thereby making a full use of the free trade zone system.

(2) Integrating and Enhancing Information/Communication Industry

The highly sophisticated technology of the information and communication industry will assist in generating new life styles, which enjoy both an increase in affluence and leisure time, and in vitalizing the economy by creating new industries and improving productivity.

The development of these new industries will create an extensive employment, and the resulting improved productivity will lead to shorter working hours andprovide workers with more leisure time.

The concept of "a multimedia island" proposed by the government's Okinawa Policy Review Council describes Okinawa as a leading model region where new industries are created in the highly sophisticated information and communication society of the 21st century. Thus, it proposes to bring about various information and communication policies for Okinawa exclusively and construct an industrial and economic society in preparation for the new ages to come.

In order for Okinawa to reach this goal, it is vital to promote the information and communication infrastructure, nurture and maintain sensible human resources with highly trained techniques, and integrate and enhance research activities.

Deregulation and other improvements will be required to establish and integrate advanced application of on-line educational as well as medical programs for remote areas, electrical commercial dealings, geographical information services, and tourism information services.

(3) Forming Hub for International Tourism and Destination Type Resorts

Being geographically located in a subtropical zone surrounded by ocean, Okinawa is abundant in natural beauty and enjoys a unique traditional culture. Okinawa is highly regarded as an ideal site for tourism and destination type resorts. Tourism is a key industry of Okinawa.

Taking advantage of its uniqueness, Okinawa is geared to meet the increased demand in tourism by providing an opportunity to enjoy nature and maintain or improve health, and forming international tourism sites. It is also necessary for Okinawa to improve and expand its facilities to better attract tourists and create an international exchange hub. To cope with the increased demand in international conferences and the information-related software industry that will be attracted to the newly formed communities, there will be a need for easy access to jobs, housing, and entertainment facilities.

Policies which allow competition among airline companies and various discount systems should be introduced to lower airfares. An open sky policy for international airlines and deregulation of formalities for entry should be promoted.

Furthermore, talented human resources should be further nurtured to work in fields related to the tourism industry, including new businesses that accept the diverse interests of tourists and health oriented visitors.

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