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2008/SOM3/EC/SEM/006
Agenda Item: 8

Railway Regulation in Japan

Submitted by: Japan

Seminar on Best Practices in Regulation and

Promotion of Efficiency in Transport
Infrastructure Facilities
Lima, Peru
15-16 August 2008
 Ministry of Land, Infrastructure, Transport and Tourism

Railway regulation in Japan

16 August, 2008
Railway Bureau
Ministry of Land, Infrastructure, Transport and Tourism

Ministry of Land, Infrastructure, Transport and Tourism

Outline of Presentation
1. Background

2. Overview of “Law for railway business enterprises”

Phase1 Planning
phase2 Market entry
phase3 Opening preparation –arranging business asset -
phase4 Offering railway transport service
phase5 Revitalizing ailing railway company
phase6 Termination

3.Conclusion

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 Ministry of Land, Infrastructure, Transport and Tourism

1.Background

Ministry of Land, Infrastructure, Transport and Tourism

○ History of Japanese Railway

1872 Opening of First Japanese Railway （Shimbashi(Tokyo)
～ Yokohama：29km）

1881 Establishment of “Japan Railway Company” （First Private Railway Company in Japan)

1906 Promulgation of State Owned Railway Law

(Government acquired private railway companies in accordance with
nation’s military policy)
1920 Establishment of Ministry of Railway
(Established as sole government body to set technical standard)

1949 Establishment of Japanese National Railway（JNR）

1964 Opening of Tokaido Shinkansen (High Speed Train) (Tokyo～Osaka)
1975 Full Opening of Sanyo Shinkansen （Shin-Osaka～Hakata）

1982 Opening of Tohoku Shinkansen & Joetsu Shinkansen

1987 Establishment of JR Group as a result of JNR

Reform
2006 Complete Privatization of 3 JR companies in
the Mainland Japan (Highly populated area in
Japan)
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 Ministry of Land, Infrastructure, Transport and Tourism

Outline of Japan National Railway Reform

Before JNR reformation in 1987
- Under “State Owned Railway Law”, all Japanese railway, including
Shinkansen(High Speed Railway in Japan), was owned by government.
- JNR was public corporation established by Japan National Railway law.
All budget and fare must be approved by Parliament.
- As a exception of national ownership, private railway companies were
permitted to operate railway business only within limited regional area.

After JNR reformation in 1987

- National ownership rule of railway was abolished.

- JNR was divided into 6 regional and 1 freight private companies.
- “Law for Railway Business Enterprise” was newly enacted as a basic rule
applicable to new JR companies and all private companies.

The
The list
list of
of Railway
Railway enterprises
enterprises in
in Japan
Japan Ministry of Land, Infrastructure, Transport and Tourism

as of March 31th, 2006

Enterprise type Total Route Length (km)
JR*（passenger railways） 6 20,010
Major private railways 16 2,896
Semi-major private railways 5 117
Regular
Railways owned and operated 11 345 36,193
Railways
by local government
Small and Medium-sized 117 3,663
railways
Freight Railways 13 8,828
Monorail 9 109
Automated Guided Transport (AGT) 11 157
Others 15 32
Total 203 36,491
* JR (Japan Railway) companies are founded as a result of JNR reformation.
６

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 Ministry of Land, Infrastructure, Transport and Tourism

2. Overview of “Law for railway business enterprises”

Overview of “Law for railway businessMinistry of Land, Infrastructure, Transport and Tourism
enterprises”

1.Planning 2. Market entry 3. Opening preparatin 4.Offering railway transport service 5.Revitalization 6. Termination
- Getting business asset - (When the demand
(Before operation) (After operation) downturns)
on the master plan authorized by government.
Would-be railway operators make up plan based
｛ railway company

(Rolling stock/
at local conference
Decide termination
Fare approval

Equipment )
Get business license

Better Service Set up local

Arranging rolling conference
Stock or other asset
Operating plan

Safety Management
/Safety operation
Safety Management
｝

(Infrastructure)
Revitalization
Manual

Construction of plan
facilities Secure Security
= Counter-terrorism
Abolition
→Approval of
construction work
｛ Government
（ making transport policy

・ supervise operators to
Perform safety Check in Guide local
Check assure consumer convenience ・support motivated
inspection the view of community to
- Economic user local people
・supervise operators to keep substitute
feasibility convenience ・financial support
- Approve assure safety local transport
- ability to ensure to facility
construction work (ex. Bus
security renovation
- Subsidize transportation)
- ability to pursuit ・ encourage counter-
｝

construction work
its business terrorism measure
）

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 Ministry of Land, Infrastructure, Transport and Tourism
Phase1 Planning

• “Counsel for Transport Policy” (CfTP, Attachment body of

Ministry of Land, Infrastructure, Transport and Tourism(MLIT))
formulates the master plan.

• Those who have any intention to enter railway business

(“would-be railway operator”) refer it and prepares the
precise business plan.

• MLIT provides policy menu to support the railway construction.

Construction
ConstructionProgress
Progressof
ofRailway
RailwayLines
Linesin
in Tokyo
Tokyo
Ministry
Met.
of Land, Infrastructure,
Area
Met.Transport
Area
and Tourism
Recommended
Recommendedby bythe
theCouncil
Councilfor
forTransport
TransportPolicy Policy

Existing Line
A1 Line
Tsukuba Express
Saitama Railway
A2 Line Akihabara to Tsukuba
Akabane-Iwabuchi to Urawa-Misono
B Line

Already opened

Hokuso Railway
Inzai-Makinohara to Imba-Nihon’idai
Tokyo Met. Gov., Oedo Line
Shinjuku to Tocho-mae
Tokyo Waterfront Area Rapid Transit, Rinkai Line
Tokyo Teleport to Osaki

Construction Progress as of 1.Apr.2007 (km)

Tokyo Met. Gov., Mita Line Recommende Not Under Opened

Meguro to Mita d Length started Const.
Tokyo Metro, Namboku Line
A1 Line 288 45 95 148
Meguro to Tameike-Sanno
(To be completed by (100%) (16%) (33%) (51%)
2015)
A2 Line 167 152 15 0
(To be started by 2015) (100%) (91%) (9%) (0%)
Yokohama Minatomirai Railway B Line 203 203 0 0
Yokohama to Motomachi-Chukagai (To be examined) (100%) (100%) (0%) (0%)
Total 658 417 93 148
0 10 20 (100%) (63%) (14%) (23%)

Kilometers 10
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 Ministry of Land, Infrastructure, Transport and Tourism
Phase2 Market entry

• Would-be railway operator need to get license from MLIT.

• MLIT review the ability of the applicant.

The check list includes
- Whether the business plan is economically feasible

- Whether the business plan is appropriate for ensuring safety

- Whether the business plan is appropriate for performing business

judging from the viewpoint other than the above items.
- Whether the applicant has sufficient ability to pursuit its business

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Ministry of Land, Infrastructure, Transport and Tourism

Phase3 Opening preparation –arranging business asset -

• Would-be railway operators procure rolling stock and

equipment. They also construct necessary infrastructures.

• Basically, the would-be railway operators must procure all

necessary assets by their own funding.

• However, considering the huge initial cost for the railway

infrastructural construction, government provides various
policy menu.

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 Ministry of Land, Infrastructure, Transport and Tourism

Governmental subsidies for new railway construction

1. Urban railways construction
Including
- Railway construction to airports (EX. Center of Tokyo to Narita Airport)
- New subway line construction
- New suburb commuter line construction
- Improvement project (shortcut line construction and the improvement
project of interlinking)
2. Trunk line railways construction
Including
- New Shinkansen Construction*
- Speed-up project for the existing trunk railways
- Reinforcement of freight transport capacity
* Shinkansen infrastructure is constructed by JRTT (public corporation for railway infrastructure construction).
JRTT owns infrastructure and leases it to Shinkansen operator. 13

Phase4 Offering railway transport service Ministry of Land, Infrastructure, Transport and Tourism

Before starting operation, the fare/fee must be approved by MLIT. In

addition, railway operator must submit operating plan and establish safety
management system to MLIT.
• Get Fare approval – Upper limit regulation
- Railway operator sets the upper limit of the fare
- Government approves the upper limit
Criteria for the approval : do not exceed the appropriate cost + appropriate profit
under efficient operation
- Railway operator fixes the fare within upper limit and report it to MLIT
• Submit Operating plan
- Railway operator must report the operating plan including timetable to MLIT.

• Set up Safety Management System for railway enterprise

- In order to ensure pro-safety management, railway companies are required to set up “Safety
Management System”.
Basic structure of Safety Management System
- Railway operators prepare Safety Management Manual, which includes basic policy for safety
improvement activity, organizational structure, internal communication procedure and internal audit
scheme
- Railway operators appoint “Safety General Manager”(board member class) and “Manager for railway
operation”(director class) 14

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 Ministry of Land, Infrastructure, Transport and Tourism
Phase5 Revitalizing ailing railway company

- When a railway operator finds the continuation of the business

financially difficult due to the downturn of demands, local
community and operators may jointly set up “local conference for
railway revitalization”.

- The conference formulates “revitalization plan”.

- MLIT support the realization of the plan through favorable

treatment.

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Ministry of Land, Infrastructure, Transport and Tourism

Phase6 Termination

- If the local conference decides the termination of the business, the

railway operator files the intention of termination at one year before
the scheduled termination day.

- MLIT may shorten the one year waiting period if MLIT finds the
termination does not jeopardy the public convenience of the local
community.

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 Ministry of Land, Infrastructure, Transport and Tourism

3. Conclusion
• Private railway companies take initiative of railway construction.
- Railway companies own infrastructure, rolling stocks and other equipment.
- Railway company has primary responsibility of finance.

• Government support and supervise the private railway company.

- Government provide master plan
- Government provides various policy menu to facilitate railway construction
- Government supervises railway company to ensure safety, security and user-
friendly railway system

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Ministry of Land, Infrastructure, Transport and Tourism

Thank you

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