Japan now faces numerous challenges on both the domestic and international fronts. We must achieve growth to build a truly stable economy for the Japanese people and corporations to regain their confidence and for Japan to display changes and new potential to the international community. Rejuvenating the Japanese economy is precisely what the Japanese people expect of the new administration.
The pressure of global competition mounting every day has made it an urgent task to secure an international equal footing in the business environment by improving Japan's regulations and institutions that act as obstacles to economic vitality. The nation must move as swiftly as possible to create conditions where the private sector can give full play to its strengths and promote innovation, including participation in negotiations for the Trans-Pacific Partnership (TPP) and other steps to advance free-trade regimes. These efforts can reinvigorate the economy by attracting domestic and foreign investment and boosting employment, thereby breaking Japan free from its deflationary situation at an early date.
We hope to see the new administration obtain cooperation from both ruling and opposition parties based on an approach that puts the people and policy first, tackle the key policy issues listed below quickly and resolutely, and produce results. Keidanren will offer its full support toward these goals.
- 1. Full-fledged recovery from the Great East Japan Earthquake
- 2. Implementation of economic policy to promote growth
- 3. Ground-up reformulation of energy and environmental policy
- 4. Advancement of sustainable, growth-compatible fiscal and social-security reforms
- 5. Enhanced cooperative ties with other countries
1. Full-fledged recovery from the Great East Japan Earthquake
Through drastic expansion of the Special Zones for Reconstruction and simplification of related procedures, as well as additional steps to make use of private-sector dynamism in reconstruction projects, the administration should draw investment to the regions affected by the disaster and increase employment. The full-fledged recovery of the disaster areas will serve as a symbol of the birth of a new Japan.
2. Implementation of economic policy to promote growth
- (1) The administration should move quickly to draft and implement a supplementary budget and the budget for the coming fiscal year to prepare an economic environment conducive to growth.
- (2) Energetic currency diplomacy should be carried out involving consultations with the United States, the European Union, and other relevant parties. The government and Bank of Japan should present a united front in implementing all measures needed to make steady progress toward correcting the excessive strength of the yen while avoiding major exchange-rate fluctuations.
- (3) The effective corporate tax rate, including both national and regional portions, should be lowered to approximately 25%, in line with rates in nearby Asian nations. This should be accompanied by abolition of the special local corporate tax. The tax system to promote research and development should be dramatically expanded.
- (4) With respect to home purchases, the hike in the consumption tax should involve implementation of a measure to keep the burden on purchasers from rising. To avoid dampened consumer sentiment in the wake of the tax hike, the automobile acquisition tax and motor vehicle tonnage tax should be abolished and steps should be taken to eliminate the "tax on tax" situation now in place regarding petroleum products.
- (5) To speed the creation of a free, smoothly working environment for enterprises, a powerful organization for promoting needed steps should be put in place directly under the prime minister. This organization should undertake bold reforms of regulations and systems in areas including urban development, ICT, medical and nursing care, the environment, and agriculture.
- (6) A flexible labor market should be constituted to help create diverse employment opportunities.
- (7) Steps should be taken to improve logistics infrastructure and to further reform trade procedures, measures essential to maintaining and enhancing the global competitiveness of Japan's industry.
- (8) Toward the realization of more deeply integrated use of ICT in government, laws should be passed to establish the governmental post of chief information officer (CIO) and steps should be taken to put ICT to use to make administration more efficient and transparent and to improve the quality of administrative services.
- (9) Reforms should be advanced to devolve more authority to the regions as a blueprint is crafted toward the eventual creation of a system of larger regional governments or doshu-sei.
- (10) University reform and enhanced cooperation between industry and academia should be undertaken to foster the human resources that can contribute to the development of global businesses and accelerate innovation in Japan.
- (11) The content, tourism, and other service industries will be areas of future growth; policies are needed that will help Japanese players to actively extend their operations in overseas markets and boost their competitiveness.
- (12) Package-style infrastructure exports involving cooperation between the public and private sectors should be promoted. From this perspective, people at the highest levels of government need to make sales efforts abroad while also making use of Japan's official development assistance program, the Japan Bank for International Cooperation, and the Nippon Export and Investment Insurance.
3. Ground-up reformulation of energy and environmental policy
- (1) The administration should move quickly to clarify the forecast for electricity supply and demand in summer 2013, as well as needed measures in this connection. Based on this, a blueprint should be drawn up for securing needed electricity at economically viable prices over the next 3-5 years.
- (2) Nuclear power plants whose safety has been confirmed should be brought back online with the approval of the communities hosting them. The process to achieve this needs to be clearly spelled out and accelerated as much as possible, given the fundamental premise of ensuring the plants' safety.
- (3) The current feed-in tariff system for renewable energy and the tax to pay for measures to counter global warming need to be revised at an early date.
- (4) Energy policy over the mid- to long term should be reconsidered from the ground up, building on the perspective of maintaining a diverse base of energy sources, including nuclear energy. Japan must seek an appropriate balance among energy security (supply stability), economic feasibility, and environmental friendliness while ensuring safety as a fundamental premise.
- (5) Japan's mid-term targets for greenhouse gas emissions should be reconsidered in terms of international fairness, while compatibility is maintained with the nation's energy policy. As measures to reduce greenhouse gas emissions, Japan should promote use of energy-efficient appliances and energy-storage devices and pursue the development of "smart communities."
4. Advancement of sustainable, growth-compatible fiscal and social-security reforms
- (1) While maintaining fiscal discipline, the administration should make bold, focused use of the nation's fiscal resources, directing them to policies that promote growth and enhance Japanese competitiveness.
- (2) Social security assistance should be distributed more efficiently to where it is most needed, and determined systemic reforms should be implemented to clarify the division of the roles to be played by self-assistance, mutual-assistance, and public-assistance schemes. This will help to keep down the increase in the social insurance contributions of the current working generations and establish a sustainable social security system for Japan. The coming ordinary session of the Diet needs to see passage of a bill establishing a taxpayer identification number scheme.
5. Enhanced cooperative ties with other countries
- (1) Japan-US ties must remain a central element of Japan's foreign policy, and must be strengthened on both the economic and security sides. Japan should take part in TPP negotiations without delay and should share win-win negotiation outcomes with the United States and the other countries participating in the talks. Defense-industrial cooperation with the United States should be promoted.
- (2) In addition to the TPP, Japan should make steady progress toward the conclusion of a free-trade agreement (FTA) with China and South Korea and the Regional Comprehensive Economic Partnership for East Asia (RCEP), displaying leadership in efforts to build the Free Trade Area of the Asia-Pacific (FTAAP).
- (3) Japan should begin and accelerate negotiations toward an economic partnership agreement (EPA) with the European Union and pursue early agreement on this.
- (4) Japan should work to improve relations with China and South Korea.