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Policy Proposals  Comprehensive Strategy Sunrise Report

December 6, 2010
Nippon Keidanren

  1. 1. Building a New Future of the Country of the Rising Sun
    1. (1) Decline in the Status of Japan in the World Economy
    2. (2) Enhancing Industrial Competitiveness through Innovation
    3. (3) Building an Affluent and Vibrant Society
  2. 2. Developing a "Solution-Oriented Innovation Model"
  3. 3. Keidanren's New Projects
    1. (1) Future City Model Projects
    2. (2) Resource-Securing Projects
    3. (3) Human-Resource Development and Utilization Projects
  4. 4. Conclusion
  1. 1. Future City Model Projects
    1. (1) International Science City and Next-Generation Environmental City
    2. (2) Energy-Efficient Households and Communities, Low-Carbon City and Preventive Medical Care City
    3. (3) Advanced Agriculture and Education City
    4. (4) Future Environmental City and Comprehensive Global Strategic Special Zone
    5. (5) Sustainable Smart Town
    6. (6) Smart City
    7. (7) Regional Revitalization through Promotion of Medical Tourism and Local Tourist Attractions
    8. (8) Advanced Medical Care Town
    9. (9) Advanced Transportation City
    10. (10) New-Generation Satoyama Green Infrastructure
    11. (11) Biomass Town
    12. (12) Advanced Distribution Hubs for Asia
    13. (13) Global Skills Training and Technology Education City
  2. 2. Resource-Securing Projects
    1. (1) Next-Generation Biofuels
    2. (2) Rare Earth Recycling
  3. 3. Human-Resource Development and Utilization Projects
    1. (1) Corporate Support for School Education Aimed at Counteracting the Decline in the Interest of the Young-Generation in Science
    2. (2) Collaboration with the 13 Universities Selected under the "Global 30" Project to Develop Global-Minded Human Resources
    3. (3) Scholarships to Support Japanese Students Studying Abroad and Foreign Students Studying in Japan
    4. (4) Utilization of the Talents of Foreign Students and Highly Skilled Foreign Personnel
    5. (5) Internship Model Project
    6. (6) Talent Bank
    7. (7) Utilization of Former Plant Sites

1. Building a New Future of the Country of the Rising Sun

(1) Decline in the Status of Japan in the World Economy

As the world economy has become increasingly globalized, not only Western countries but also emerging economies such as China, India and South Korea have been stepping up national efforts to enhance their competitiveness. As a result, the member countries of the Organization for Economic Co-operation and Development (OECD), excluding Japan, achieved economic growth of 2.4 percent per year in real terms and 6.0 percent per year in nominal terms over the years from 1995 to 2009. By contrast, Japan experienced two lost decades. The economy grew only 0.7 percent per year in real terms during the same period, barely maintaining a level of growth that allowed the people to enjoy good living standards, and in nominal terms, it contracted at an average annual rate of 0.2 percent. If the present situation is allowed to persist, Japan alone may be left behind in the growth of the world economy.

(2) Enhancing Industrial Competitiveness through Innovation

After the World War II, Japan achieved strong economic growth for years by capitalizing on its diligent workforce and technological prowess. But in recent years, emerging economies, armed with abundant and low-cost workforces, have been increasing their presence in labor-intensive industries. And due to the advancement of information-network technologies, newly developed technologies are transferred across countries within short periods of time. In order to achieve sustained economic growth in this new environment, it is necessary to develop new types of businesses one after another that other countries cannot easily imitate, by building on innovative ideas and unique technologies.

Japan already possesses excellent technological capabilities and human resources in the fields of the environment and energy, information and communications technology (ICT) and other advanced technologies, as well as manufacturing. By further improving these strengths, continuously developing innovations, and thereby enhancing industrial competitiveness, rather than being overly pessimistic, Japan will definitely be able to revive its economy.

(3) Building an Affluent and Vibrant Society

Companies are the main engine for innovation. We Nippon Keidanren, therefore, will undertake new private-sector-led projects where companies will work together across different industries and types of business, while also cooperating with the public sector, to develop innovations by bringing in their ideas and advanced technologies and conducting various trials and field-tests. Technologies successfully commercialized in these efforts will be rolled out widely both in Japan and overseas with the aim of creating new industries and expanding markets.

Japan, as one of the world's most advanced economies, must overcome the challenges facing the country by creating a vigorous, private-sector-driven economy and strive to build a nation where the people can live safe and secure and enjoy high quality of life even in the face of a decrease in the population.

2. Developing a "Solution-Oriented Innovation Model"

Innovation does not necessarily proceed in a straight line. It is not always the case that basic research leads to new knowledge, which then gives rise to a new technology, which in turn leads to a new product. It follows different patterns depending on factors such as when and where it takes place and what consumers need. Japan should construct a unique model that is suitable for the present circumstances and strive to become an innovation-driven country and lead the world in developing innovations in a wide range of areas.

We Keidanren believe the way forward for Japan is to construct a "solution-oriented innovation model," which aims to create innovations by seeking to solve critical global issues. Japan is confronted by a host of issues, which include the fight against climate change, energy and resource security, low birth rates and an aging population, revitalization of regional economies along with structural reforms in the agriculture sector, and declining competitiveness as a business location (together with the decrease in research and development capabilities and the deteriorating quality of human resources). Regarding climate change, Japan has long been making painstaking efforts to balance economic growth and environmental protection. As climate change issues have caused great concern to the international community, efforts in this area are becoming even more important.

Many other countries are also faced with these same issues. If Japan can take the lead in solving these critical global issues and provide the solutions around the world, it will be able to contribute to the prosperity of the international community, not just resolving its own problems. In addition, innovations developed through its strenuous efforts to address these issues will drive economic growth. The Japanese government and private sector should join forces to make a "creative cycle of solution-oriented innovation" work in which profits generated from the economic growth will be reinvested to fund the efforts to develop more innovations.

For creating such innovations and providing new products and services using them widely in Japan and abroad, developing and recruiting world-class high-quality human resources is essential. Therefore, the government and the private sector should cooperate to further enhance Japan's human resource base.

3. Keidanren's New Projects

Japan boasts advanced technologies and high-quality human resources. In order to enhance industrial competitiveness, Japan should give full play to these strengths and put a solution-oriented innovation model into practice. Based on this perspective, we Keidanren will undertake new projects that include the following three key efforts:

(1) Future City Model Projects

For Japan to achieve sustained strong economic growth, the business community needs to develop a private-sector-led, self-reliant growth model and put it into action. To achieve this, we will implement "Future City Model Projects". In these projects, Japanese companies will bring to selected cities their most advanced technologies in such fields as the environment and energy, ICT, medical care, and transportation. And the companies will conduct field-tests to develop innovative new products, technologies and systems, while also implementing projects for supporting education and child-rearing and promoting tourism, with the aim of ensuring that the people in the cities can live safe and secure and enjoy high quality of life.

The objectives of these projects are (a) to solve major societal issues, (b) to create cities where everyone would like to live, (c) to enhance industrial competitiveness by combining strengths and capabilities across industries, and (d) to achieve growth by providing newly-developed innovative solutions widely in Japan and overseas.

The locations of the projects will be selected flexibly from candidates, including cities with populations of around 200,000 to 300,000, by taking account of how easy to build necessary infrastructure and develop new businesses as well as the potential contribution to revitalization of the region. Other considerations will include the nature of the technologies to be tested, distinct characteristics of the region, and the level of commitment of the local government.

In principle, since these projects are private-sector-led initiatives, the participating companies will bring their own new ideas, technologies, products, and other resources and work to get return on the investment through their own operations. In areas that private-sector companies are unable to handle on their own, the participating companies will cooperate or partner with relevant public institutions, such as medical institutions and educational establishments. And if it is not possible to implement their projects or achieve sufficient return unless certain regulations are removed or seed money is provided, the companies will seek the support of the national or local government. Specifically, we will consider collaborating with the national government in their Comprehensive Special Zone System and Future City initiatives.

It will be the role of the public sector to handle public works and services relating to social infrastructure development. Nevertheless, in areas where private-sector companies can provide better services, we will work to develop new business models to take advantage of the power of the private sector, by using schemes for public-private collaboration, such as the Public-Private Partnership (PPP) and the Private Finance Initiative (PFI).

These projects will be implemented in various locations in Japan, and for each place, we will select two or more areas to work on from among the following eight fields:

A. Low-Carbon, Environment-Friendly Community

As an effort to address global environmental problems, build a sustainable, low-environmental-impact model city with a particular focus on low-carbon footprints, material and energy recycling, and harmony with nature, and introduce the fruits of the effort widely in Japan and overseas.

B. Advanced Medical Care and Nursing

In order to address the problems of medical care and nursing in an aging society, build a new system to efficiently provide high-quality medical care and nursing services that meet user needs and also develop and conduct field-tests of advanced medical-care systems, services, and equipment.

C. Next-Generation Transportation and Distribution Systems

Develop a low-environmental-impact transportation system that enables people to move safely, comfortably and efficiently, by incorporating advanced ICT as well as sensor, energy-conservation and other state-of-the-art technologies into cars, trains and buses, and conduct field-tests of the system. Also develop and perform field-tests of a next-generation logistics system with the aim of increasing Japan's international competitiveness as a distribution hub.

D. Advanced Research and Development

Invite world-class research scientists and institutions, along with their state-of-the-art technologies, from within Japan and around the world, to make the Future City their R&D centers to conduct research and development of advanced new technologies, perform field-tests of their laboratory results and disseminate their findings worldwide.

E. Next-Generation E-Government and E-Society

Create a showcase of a next-generation ICT society in which ICT is extensively used to enhance convenience in daily life and improve efficiency in business, public services and other fields, and introduce the fruits of the project widely in Japan and overseas.

F. International Tourism Hubs

Build tourism hubs that attract visitors from within Japan and from overseas, by improving local tourist attractions, including natural, historical, cultural and commercial attractions, and cooperating with transportation, medical-care, and other service industries.

G. Advanced Agriculture

With the aim of enhancing the competitiveness of the agricultural industry and revitalizing regional economies, the participating companies will engage in the whole chain of agricultural business, from production, processing and distribution to marketing and sales, and develop innovative management practices for agricultural business by using advanced agricultural technologies and state-of-the-art production, processing and distribution methods.

H. Child-Rearing Support and Advanced Education

Create new educational curricula designed to help develop people who can deliver strong performance in a highly-competitive global business environment, by using ICT and other state-of-the-art technologies extensively. Also create an environment where families feel comfortable having and raising children, by using ICT and other technologies.

In September 2010, Keidanren compiled its interim report on the "Future City Model Projects", which sets out the objectives and frameworks of the projects as described above. We have since been working with the participating companies to study details of project plans, locations, necessary action items and other issues, while liaising with local governments and various related organizations.

With regard to the Japanese government's Comprehensive Special Zone System, with which we are planning to link our Future City Model Projects, its related bills will be submitted during the ordinary session of the National Diet in 2011, and calls for proposals are expected to be issued as early as the spring of 2011, followed by the designation of the special zones sometime between the summer and the autumn of 2011. Based on this estimated schedule, we will determine the details of our Future Model City Projects, taking account of the trends in technical innovation and societal changes and considering how we should evolve the projects in the future. We will produce our final report by the end of March 2011.

(2) Resource-Securing Projects

With the emerging economies growing rapidly and the global population continuing to increase, competition has become increasingly fierce in the procurement of natural resources necessary for maintaining social systems and conducting production activities. Japan, which depends heavily on imports for most of the major resources it needs, is now at great risk of suffering serious damage to its economic activity from the tightening global supply-demand balance for natural resources.

In order to maintain the sustainability of Japan's economic and social systems under these circumstances, the business community will undertake projects for increasing resource security, such as development of next-generation bio-fuels and recycling of rare earth elements.

(3) Human-Resource Development and Utilization Projects

In Japan, children's interest in science has been decreasing, and the number of high- school students wishing to enroll in science and technology courses at university is declining. In addition, in recent years, young people have become increasingly inward-looking: many university students are indifferent to studying abroad and a number of young recruits shy away from the chance to work overseas. In order to strengthen its international competitiveness, Japan needs people who can drive innovation free from conventional wisdom and contribute to the growth of Japan as a nation built on science and technology and people who can make a difference in the field of global business. Our human-resource development and utilization projects will aim to develop such human resources through business-government-academia collaboration.

The development of competent human resources in the field of science and technology is a particularly important issue. We will communicate to universities and graduate schools the skills and capabilities that companies expect of graduates and will provide its recommendations on school curricula, while also expanding opportunities for joint research and internships, in order to help improve Japan's science and technology education.

In addition, in order to promote the diversity of the Japanese society and introduce varieties of different know-how and values and innovative ideas, we will promote the hiring of foreign students and highly-skilled foreign personnel.

4. Conclusion

Today, Japan is at crossroads, unsure whether it will see a new dawn again as "the country of the rising sun." In order to restore Japan, it is vital to achieve "strong economy, strong finance and strong social security" as proclaimed by the government, with a firm commitment to opening the country. Japan should, under strong political leadership, implement the government's New Growth Strategy speedily and completely, undertake the comprehensive reform of taxes, public finances and social security to maintain public confidence, and step up efforts to enter into economic partnership agreements, including the Trans-Pacific Partnership (TPP).

We Keidanren will take the initiative in undertaking the projects described in this report, while also cooperating with local governments that share our strong commitment to building a new future of Japan. At the same time, we will call on the national government to support our efforts by immediately implementing policy measures necessary for creating a more favorable business environment, particularly, (1) increasing government investment in research and development (to one percent or more of the gross domestic product), (2) pushing through regulatory and institutional reform, and (3) establishing the Comprehensive Special Zones.

By implementing the projects presented in this report, we Keidanren will continue to vigorously pursue our mission as an economic organization not just proposing policies but taking action.

List of Projects

1. Future City Model Projects

(1) International Science City and Next-Generation Environmental City

As an effort to address the needs of Japan's aging society, provide advanced high-quality health management and home healthcare services through cooperation with local medical care institutions. Also build a low-carbon community by introducing green technologies into residential and other buildings extensively and developing low-carbon energy, mobility and information infrastructures. With the aim of creating jobs and new industries, support venture firms by using local human capital and intellectual properties of local universities and invite research institutions, universities and research-oriented companies from within Japan and from overseas. Also implement programs for promoting urban agriculture.

(2) Energy-Efficient Households and Communities, Low-Carbon City and Preventive Medical Care City

Build an energy-efficient community by introducing state-of-the-art energy-generation, energy-conservation and energy-storage technologies into households and commercial and public facilities throughout the region. Develop a next-generation transportation system by introducing ITS (Intelligent Transport Systems) and green vehicles. Also develop an innovative health-monitoring system that use sensors and ICT devices built in vehicles to collect and store individuals' daily health information and share the data with medical institutions, in order to promote preventive medical care.

(3) Advanced Agriculture and Education City

With the aim of achieving highly productive agriculture, conduct field-tests of advanced agricultural technologies, such as GPS-guided unmanned farming equipment and high-precision agricultural chemical spraying, and develop a low-environmental-impact agricultural production system that reuses waste materials and utilizes energy-efficient equipment and renewable energy. Also field-test advanced tracking technologies to achieve new levels of traceability in the distribution of agricultural products. In the area of education, for the purpose of increasing the quality of school education, introduce digital educational materials and ICT devices such as tablet PCs. Perform field-tests of IC-tag GPS technology to improve child security at school and on the way home from school.

(4) Future Environmental City and Comprehensive Global Strategic Special Zone

Build an advanced environment-friendly community by introducing smart grids and other next-generation environmental technologies. Develop a low-carbon industry park by inviting green product manufacturers and high energy-efficiency factories and provide a model for other Asian countries to follow. With the aim of entering water businesses overseas, conduct field-tests of advanced water technologies for sewage water purification and sea water desalination and develop an energy-efficient, low-cost water management system through public-private cooperation.

(5) Sustainable Smart Town

Develop an environment-friendly transportation system by introducing power-assisted bicycles using solar-generated electricity, along with a bicycle-sharing scheme. Also develop advanced education systems by extensively using ICT technologies and high-definition and 3D imaging technologies, including an interactive distance learning system that connects schools within the region, as well as local schools and overseas schools.

(6) Smart City

Develop a low-carbon city by introducing zero-emission and renewable energy sources, smart meters and high-efficiency air-conditioning systems. Build a next-generation transportation system by introducing electric vehicles and high-speed battery charging facilities.

(7) Regional Revitalization through Promotion of Medical Tourism and Local Tourist Attractions

In order to provide high-quality, high-efficiency medical care services, develop partnerships with local clinics and the region's major medical centers and build an ICT system that enables the sharing of patients' medical care information. Also develop medical tourism businesses by offering advanced medical care and promoting local tourist attractions.

(8) Advanced Medical Care Town

Develop an advanced high-efficiency medical care service network that enables the sharing of patients' medical care information among local hospitals, family physicians and specialist physicians and provide on-line medical consultation services by using the network. Build a reliable emergency medical care system in which paramedics, ambulance workers, physicians and hospitals share patients' vital information during transport and provide effective emergency care.

(9) Advanced Transportation City

Build an advanced transportation city by introducing electric buses, the park-and-ride system and transit malls. Develop an intelligent bus information system to provide in buses and at bus stops various information, including destinations, transit, timetables and maps, as well as tourist information and weather forecast.

(10) New-Generation Satoyama Green Infrastructure

Develop environment-friendly, sustainable communities in satoyama (countryside with farmland and woodland) by utilizing wood biomass as a source of energy and heat and as a material for industrial products, such as nano-carbon materials.

(11) Biomass Town

Develop sustainable communities by utilizing wood biomass, such as forest thinnings and forest residues, for generating electric power and producing biomass gas for industrial use, as well as by converting household waste into bio diesel fuel, fertilizers and biomass gas.

(12) Advanced Distribution Hubs for Asia

Build advanced distribution hubs by developing automated integrated transportation systems for carrying goods from harbors to warehouses to airports, with a particular focus on the transport between Japan and other Asian countries of service parts, pharmaceuticals and other "business to business" products that need fast delivery.

(13) Global Skills Training and Technology Education City

Develop programs for global skills training and technology education through industry-government-academia cooperation, which encompass foreign language education, science and technology education, technical training at factories and student exchange programs.

2. Resource-Securing Projects

(1) Next-Generation Biofuels

Develop cellulose-based bio-ethanol for automobile fuel and bio-fuels derived from microalgae for jet fuel. Through industry-government-academia cooperation, develop a cost-effective and ecological biofuel production system that covers the whole chain, from the cultivation of biomass materials to the production of purified biofuels.

(2) Rare Earth Recycling

Develop innovative, low-cost, low-environmental-impact rare earth recycling technologies and build a economically-viable recycling system that includes, dismantling products into parts that contain rare earth elements, extracting used magnets and reprocessing them to produce rare earth metals.

3. Human-Resource Development and Utilization Project

(1) Corporate Support for School Education Aimed at Counteracting the Decline in the Interest of the Young-Generation in Science

Review the current education support programs implemented by Keidanren member companies, including the program of sending their employees to elementary, junior-high and high schools as science teaching assistants and special lecturers and the program of conducting science experiments for students at corporate facilities. Promote best practices to educationalists and teachers through various measures, such as publishing booklets and building databases on the web.

(2) Collaboration with the 13 Universities Selected under the "Global 30" Project to Develop Global-Minded Human Resources

Collaborate with the 13 universities selected under the "Global 30 Project for Establishing Core Universities for Internationalization" led by the Ministry of Education, Culture, Sports, Science and Technology to develop people who can make a strong contribution to the company's efforts to create innovations and achieve growth in the face of global competition. Together with the 13 universities, develop university-level courses aiming at developing global-minded human resources and organize forums to promote industry-government-academia cooperation in this area.

(3) Scholarships to Support Japanese Students Studying Abroad and Foreign Students Studying in Japan

Develop new scholarships to support Japanese students studying abroad and foreign students studying in Japan who major in business, economics and law, by collaborating with the 13 "Global 30" universities with the aim of developing personnel who will play a leadership role in companies' global business activities.

(4) Utilization of the Talents of Foreign Students and Highly Skilled Foreign Personnel

Review the initiatives implemented by Keidanren member companies for making better use of the talents of foreign students and highly skilled foreign personnel. Promote best practices to encourage the member companies to enhance the diversity of their workforce.

(5) Internship Model Project

Develop credit courses in tourism studies departments of universities that combine lectures delivered by member companies' employees with corporate internship programs, with the aim of developing skilled human resources for the tourism industry.

(6) Talent Bank

In cooperation with the government, utilizing existing institutions currently engaging in similar business, develop databases for job openings and applicants, targeting soon-to-retire employees age 60 or older in private-sector companies and manager-level national public servants, in order to help match employers with skilled people particularly in high-growth industries and alleviate manpower shortages at small- and medium-sized companies.

(7) Utilization of Former Plant Sites

Build a human resource development center at a former plant site to provide experience-based education and training for employees as well as for non-employees and children.

Comprehensive Strategy