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Business

Japan policy remains grounded as sharing economy takes off

Hamstrung domestic startups are frustrated by snail's pace of regulatory reforms

In Indonesia, a motorcycle-sharing startup is taking the market by storm, boosting the earnings of motorbike taxis like this one in Jakarta.

JAKARTA/TOKYO -- Jakarta's traffic-clogged streets aren't exactly lined with gold, but they are becoming a healthy source of revenue for drivers of motorbike taxis as Indonesia's sharing economy takes off.

One driver has seen his monthly income rise 50% in about 18 months since he quit chauffeuring for a wealthy family and started his own motorbike taxi. He is one of roughly 250,000 drivers in the city working with startup Go-Jek, a ride-hailing service for motorbike taxis. The company's formidable army of drivers has been steadily chipping away at Blue Bird, the nation's largest traditional taxi service that boasts a fleet of 30,000 vehicles.

Since Uber Technologies debuted in 2009, ride-hailing services like Go-Jek have been on a global tear. In Southeast Asia and China, a number of startups have leveraged the sharing economy to create lucrative, app-driven ride-hailing services tailored to local needs. Singapore's Grab is now found in six countries, while China's giant Didi Chuxing is believed to handle some 10,000 rides per minute.

Japan, meanwhile, seems to have missed the bus as regards this dynamic new economy. While other Asian countries are riding high, Japan is still mired in post-World War II economic policies that have outlived their shelf life. And if the government's response to Airbnb-type home-sharing services is any indication, expect the sharing economy to be moribund by the snail's pace of the country's legislators.

Policymakers lurching along

Japan's outdated policymaking machine is failing miserably to keep pace with rapid changes to the world economy. A proposed bill to regulate the growing home-sharing business, known as "minpaku", is symbolic of the problem. Finally endorsed by the cabinet on March 10, the bill does little to ease the worries of people like Yasuhiro Kamiyama, president of Hyakusenrenma, a Miyagi-based home-sharing startup. Kamiyama has been frustrated by the government's incredibly slow response. 

It took until November 2015 for the Tourism Agency and the Health, Labor and Welfare Ministry to even form a panel to discuss minpaku. After 13 meetings, the panel published its final report in June 2016. But squabbling among lawmakers regarding the number of days a premise could host travelers delayed submission of a bill to the Diet the following autumn.

After agreeing on 180 days per year, the Diet is now poised to start debating the bill.

Despite the power and influence that Prime Minister Shinzo Abe wields, a new law regulating minpaku is unlikely to appear before next year. Meanwhile, Airbnb is steadily solidifying its presence in Japan, while Chinese online lodging marketplace Tujia.com is moving into the market.

As the government drags its feet, local entrepreneurs could end up being squeezed out of a market in which innovative foreign businesses rake in hefty profits, capitalizing on opportunities unavailable to Japanese businesses due to the current oppressive regulations.

The global sharing economy, led by ride- and room-sharing businesses, is expected to reach an estimated $335 billion in 2025. But domestic innovators like Hyakusenrenma may find themselves locked out by an outdated policymaking machine that has yet to come to grips with this new economic model.

(Nikkei)

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