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Policy Proposals  Comprehensive Strategy Reviving Japan through Resolution and Action FY 2012 Organization Policy

June 5, 2012
(Japan Business Federation)

Our country is currently standing at a crossroads in history. There are pressing issues that must be dealt with in an environment of fierce global competition: rectifying the historic appreciation of the yen; overcoming deflation; reconstructing the social security system to accommodate both our aging society and our declining birthrate; achieving fiscal consolidation; and promoting economic partnerships. In addition, there are new issues following last year's Great East Japan Earthquake: recovery and reconstruction, and the stable and economical supply of energy. If we take too much time in addressing these problems, we face a hollowing out of industry, accelerating unemployment, and a deteriorating current account balance. In order to revive Japan, we must open up the nation through decisive action in domestic reform, put together a concrete agenda to work on a roadmap for a viable growth strategy, and execute the initiatives with a sense of urgency. We at Keidanren call for strong political leadership and grand decisions that cross party divisions to promote the national interest.

As an organization that takes decisive action, Keidanren will vigorously press for solutions to the issues listed below. We will make concerted efforts to enable innovation, such as the promotion of our Future City Model Projects and the development of world-class human resources, and we will seek to fulfill a central role in reviving Japan. At the same time, by making full use of the experience and knowledge that we have cultivated through our business activities to date, we will work at disseminating clear information to gain public understanding.

1. Accelerating Full-Scale Recovery From the Disaster

Toward full-scale recovery and rehabilitation, the national government should support local administrators' ability and the nation's united efforts should be strengthened. In particular, the Reconstruction Agency should be given more authority. Under its strong leadership, the restoration of the foundation of infrastructure in the affected regions can accelerate, and through ample publicity and further expansion of the system of special zones for reconstruction those regions' activities can reach their full potential. In this way we can stimulate investment from within Japan and abroad, increase employment, and drive economic growth.

2. Realizing Economic Growth and Creating Jobs

International competitiveness of Japan as business location should be enhanced by establishing a level playing field in the international business environment through such measures as implementing a bold reform of systems and regulations, further reducing the effective corporate tax rate, and correcting the historic appreciation of the yen. The government should aim to accelerate innovation by budgeting 1% of GDP or ¥25 trillion over five years for investment in research and development, and by expanding its tax regime for encouraging such activities. Other steps should include establishing a superprefectural regional government system to create larger economic blocs; enhancing the international competitiveness of the nation's urban functions; promoting the tourism industry; and revitalizing agriculture as a next-generation growth industry. It is also key to pioneer fields where further growth might be expected, such as environmental, and medical and nursing care businesses. Through these measures, a real growth rate of 2% and a nominal growth rate of 3% should be realized. Japan should create a society in which all people participate.

3. Establishing Sustainable Social Security and Public Finance Systems

Japan's society is aging faster than any other in the world and social security systems must be rebuilt in order to accommodate the economic and social changes. The government must raise the consumption tax to secure the immediate source of revenue while proceeding with fundamental reforms of social security that focus on streamlining and prioritizing social security benefits, under the principles of individual independence and self-reliance. In parallel with these measures, reduction in annual expenditure should be implemented by thorough administrative and financial reform. In combination with further efforts toward restructuring the tax system, the government must create a roadmap for fiscal consolidation in the medium to long-term. Greater effort must also be put into the existing issue of reducing waiting lists for nurseries and other measures to address the declining numbers of children. Furthermore, the social security tax number system should be introduced swiftly and smoothly, as part of basic public infrastructure.

4. Securing a Stable Supply of Energy and Reconstructing Energy and Environmental Policy

Energy and climate change policies should be reevaluated as a whole in an integrated manner to secure a stable and economical supply of energy, which will be essential to indispensable in executing the growth strategy. When doing so, it will be vital to be conscious of short, medium, and long term time frames. In the short term, nuclear power plants that have been confirmed safe should be restarted with ample understanding from local residents. In the medium and long terms, technological innovation should be undertaken to cut costs and stabilize the power system so that renewable energy sources can fill an important role in the future. We should also make full use of our world-leading energy and environmental technologies to achieve green innovation. From this perspective, ties need to be strengthened between government policy and proactive efforts by Japanese industries like Keidanren's Commitment to a Low Carbon Society.

5. Promoting Economic Integration and the Development of Foreign Infrastructure

Japan should leverage early participation in the Trans Pacific Partnership as a means of pursuing economic integration with major nations and regions through EPA/FTAs such as the Japan-China-Korea FTA, the ASEAN+6 EPA, and the Japan-EU EPA. Additionally, through human resource development, technical cooperation, and package-type infrastructure exports via public-private partnership(PPP) schemes, we can put in place both "soft" and "hard" infrastructure that supports economic integration, thereby leading to domestic growth. In order to strengthen the international competitiveness of Japanese businesses in infrastructure exports, a necessary precondition for achieving the above, we will also press ahead with a strategy for international standardization; construct a system for public-private partnerships in the efforts for domestic private finance initiatives; and promote mergers and acquisitions. Furthermore, while advancing their ties with private financial institutions the international finance functions of the Japan Bank for International Cooperation and Nippon Export and Investment Insurance should be enhanced and the Japan International Cooperation Agency's overseas investment and loan programs utilized.

Comprehensive Strategy