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Policy Proposals  Comprehensive Strategy Practice Sustainable Capitalism Keidanren Policy for Fiscal 2022

June 1, 2022

Russia's aggression against Ukraine is a major crisis, and it is currently destabilizing the international order that built post-war prosperity. Such an attempt to change the status quo unilaterally using force is simply inexcusable. For companies, a free and open international economic order is essential to engage in business activities globally. Given the current situation, therefore, it is crucial for Japan to further strengthen its unity with the G7 nations, which share its values including freedom, democracy, and the rule of law. Collaborating with these nations, Japan must seek to avert international fragmentation while pursuing measures that take an integrated approach to the economy, diplomacy, and national security.

Meanwhile, excessive emphasis on shareholder capitalism and market principles has resulted in a range of social issues including destruction of the natural environment and ecosystems, and the widening and replication of economic disparities. Prompt action is also required to deal with issues such as the spread of new infectious diseases, frequent natural disasters, and globally accelerating inflation. And to make matters worse, escalating prices for resources and foodstuffs have highlighted the new challenge of ensuring energy and food security.

Under such circumstances, what Japan's business community must do is practice sustainable capitalism, which is in line with the "new form of capitalism" advocated by the government. Accordingly, as Keidanren endeavors to improve well-being and achieve Society 5.0 for SDGs, it has set the measures listed below as its priority initiatives. Through these measures, Keidanren and the Japanese business community will seek to: make Japanese industry more competitive to create a virtuous cycle of growth and distribution, conserve the natural environment, restore a substantial middle class, make society fairer and more equitable, and prepare to deal with emergencies. Furthermore, amid drastic changes both in Japan and overseas, Keidanren will continue to communicate impartial opinions from the social point of view to the public at home and abroad.

1. Strengthen Collaboration to Rebuild a Free and Open International Economic Order

  • Call on the international community to adopt a unified response to Russia's aggression against Ukraine
  • Seek expansion of the CPTPP#1 and reliable implementation and management of the RCEP#2 agreement, etc.
  • Promote economic security that takes freedom of economic activity into consideration#3
  • Work to maintain and strengthen the international competitiveness of Japanese industry by making supply chains more resilient considering geopolitical risks and global policy trends regarding the environment and human rights, etc.
  • Promote management that demonstrates respect for human rights through action including human rights due diligence
  • Pursue collaboration and dialogue with governments and business organizations in various countries, including the US and the nations of Europe and Asia, and develop Japan's private-sector diplomacy by proactively participating in forums such as the B7 and the B20

2. Implement COVID-19 Measures Targeting an Exit Strategy: Shift the Focus from Pandemic to Endemic

  • While living with COVID-19, seek to strike a balance between preventing infection from spreading and continuing socioeconomic activities
  • Take action to draw up and implement an exit strategy, and shift course toward endemic#4-oriented measures
  • Lobby for development of laws that strengthen the authority of the national government and local governments to take effective measures against infectious diseases and build a robust healthcare system
  • Prepare for full resumption of international travel by lobbying for more appropriate immigration controls#5 based on scientific findings and trends in other countries

3. Accelerate Green Transformation (GX)

  • Seek implementation of Keidanren's policy proposal entitled "Towards Green Transformation (GX)" to create a virtuous economic and environmental cycle, and work with unwavering resolve to achieve carbon neutrality in 2050
  • Reinforce initiatives such as the "Keidanren Carbon Neutrality Action Plan" and "Challenge Zero," and strongly urge the government to draw up "GX Policy Package" that seeks to make Japanese industry more competitive by facilitating private-sector investment in R&D and other areas
  • With regard to carbon pricing that contributes to growth, participate actively in the GX League to help build up knowledge, and call on the government to investigate how carbon pricing could maintain and strengthen the competitiveness of Japanese industry in light of trends overseas
  • Urge the government to participate actively in creating international rules to facilitate sustainable finance, while also targeting a smooth transition
  • Work toward carbon neutrality on a global scale through initiatives including support for other Asian countries, and call for a proactive economic diplomacy strategy to achieve growth by capturing the strong demand for "green" products and services overseas
  • To ensure an energy mix based on the "S+3E"#6 concept as Japan transitions to a new energy supply structure, encourage the government to devise a concrete energy policy that includes: (1) maintaining low cost, stable energy supplies given an international situation subject to dramatic change; (2) continuing utilization of nuclear power, which plays an important role as a quasi-domestic energy source (by making maximum use of existing plants, replacement and new construction, and using small modular reactors); (3) facilitating the development of new technologies such as nuclear fusion; (4) making renewable energy a major power source; and (5) achieving next-generation electricity networks
  • In conjunction with GX, take an integrated approach to pursuing measures relating to issues such as establishment of a circular economy, biodiversity conservation, and environmental risk management

4. Pursue Digital Transformation (DX)

  • Pursue DX to create a digital society and work to realize an all-inclusive social environment in which nobody is left behind by balancing the well-being of a diverse range of individuals with optimization of society as a whole
  • Alongside ensuring that digital government becomes a reality and pursuing DX in fields such as healthcare and education, take other actions including acceleration of the multi-company co-creation project aimed at realizing value for consumers
  • Encourage the Digital Agency and other relevant parties to ensure that the Digital Extraordinary Administrative Advisory Committee steadily achieves its structural reforms, particularly making all administrative procedures truly digital throughout
  • Make specific appeals for reform of individual regulations and administrative procedures that impede DX and propose necessary tax measures that will contribute to DX
  • Take action to promote data flow as the basis for DX, promote full use of the My Number system, encourage utilization of AI (artificial intelligence), and strengthen cyber security

5. Establish Japan as a Nation Built on Science and Technology, and Strengthen Its Industrial Competitiveness

  • Strengthen medium- to long-term efforts, including financial allowances aimed at turning Japan into a world leader in science and technology through such means as improving education and research and providing environments for producing innovation in cutting-edge fields. As one element in these efforts, work to maintain and improve the R&D tax system
  • Urge the government to focus investment of resources on fields that are important for Japan and will help to make Japanese industry more competitive, such as quantum technologies, AI, biotechnology, and life science. In addition, encourage the government to provide financial support for young researchers and interdisciplinary fields to foster emerging research. To maintain and strengthen the international competitiveness of Japanese companies, lobby for Japan's business environment to be placed on an equal footing with those of other countries
  • To achieve Society 5.0, strengthen collaborative efforts involving industry, academia, and the government to nurture new technologies throughout the entire process from fundamental research to real-world implementation. The business community will also cooperate in the reform and implementation of the Cross-ministerial Strategic Innovation Promotion Program and other R&D schemes
  • Strive to promote the entertainment content industry and other aspects of the creative economy to demonstrate the soft power that earns trust and empathy from other countries
  • Call for abolition of regulations that impede the real-world implementation of new technologies, and for agile, flexible governance. Support the development of institutional frameworks to encourage blockchain technologies and new businesses in the virtual space in particular
  • Reinforce efforts to prepare for and mitigate natural disasters such as earthquakes and typhoons, as well as to improve Japan's resilience and capacity to recover. In addition, ensure that a structure is put in place at the national level for management of crises such as pandemics, and seek to improve the efficacy of companies' business continuity plans

6. Promote Startup

  • Fundamentally strengthen the startup ecosystem to lift Japan's economy as a whole and regain competitiveness
  • Increase Japan's startup base—the number of startups—10-fold by 2027. In addition, target a 10-fold increase in the level reached by the most successful startups, set KPIs to ensure the target is reached, and monitor progress
  • To meet the targets in the previous item, rapidly drive through all the necessary measures simultaneously, including entrepreneur education involving both the public and private sectors, increasing the mobility of human resources, providing funding for growth, implementing tax measures, and reforming procurement, also bearing in mind the needs of local startups
  • Endeavor to collaborate more with large companies that contribute to mobility of human resources among their ranks and the growth of startups, and work to increase M&As by large companies

7. Promote Transformation of Work Styles, Investment in People, and Educational Reform

  • Seek amendments to working hours legislation to enable workers for whom outcomes are not proportional to working hours to fulfil their potential, such as promptly increasing the types of work deemed legally eligible for the discretionary labor system
  • Encourage establishment of an environment that promotes the smooth flow of labor into growth sectors and industries
  • Aim to establish a virtuous cycle of learning and work to promote collaborative provision of support for students' career planning by industry, academia, and the government, including recurrent education, reskilling, and internships. In addition, urge the government to undertake educational reforms addressing the needs of a new era
  • Alongside furthering work style reform, call on companies to pursue diversity and inclusion that turns the active participation of diverse human resources into a strength, and to consider devising their own in-house employment systems suited to the actual circumstances in each company
  • Continue urging companies to make efforts to raise wages and comprehensively improve treatment of employees according to fundamental principles for deciding wages to ensure investment in people and appropriate distribution of wealth to workers
  • Promote appropriate trade practices by participating in the Declaration of Partnership Building initiative

8. Revitalize Local Society and Economy

  • Target a locally-driven sustainable society by promoting new flows of people from metropolitan areas and creation of new businesses according to local needs, as well as development of high-quality infrastructure to support high-quality of life
  • Accelerate investment for growth targeting initiatives such as DX and GX to realize the government's Vision for a Digital Garden City Nation
  • Collaborate with the national government, local governments, universities, sports bodies, and cultural organizations to create attractive local communities and achieve growth by promoting regional co-creation to solve local challenges in line with Keidanren's Regional Co-creation Action Program (announced in November 2021)
  • Investigate measures to turn Japan's agriculture—one of the main drivers of local economies—into a growth industry capable of exporting, and to create a sustainable, resilient tourism industry, and urge the government to take necessary action

9. Promote Fiscal Consolidation and Reforms to the Social Security and Taxation Systems

  • Seek to slow down the decline in Japan's population while considering how to create a society and economy premised on population decline
  • Work to bring about institutional reforms aimed at creating a social security system oriented to all generations that is more sustainable and increases peace of mind and security for the Japanese people. This should include addressing the balance between benefits received and burdens shouldered
  • Urge the government to restructure its revenue and expenditure to help achieve both growth and fiscal consolidation
  • Make proposals addressing amendment of the Japanese tax system to help revitalize business activity and take action to encourage revision of international taxation rules in accordance with agreements between individual nations to keep pace with the increase in digital economic activities

  1. Comprehensive and Progressive Agreement for Trans-Pacific Partnership
  2. Regional Comprehensive Economic Partnership
  3. Lobbying for governmental and ministerial ordinances related to the legislation to promote economic security, etc.
  4. In the fields of medicine and public health, an infectious disease is described as "endemic" when it occurs repeatedly in a specific geographical area with a certain incidence rate, or in a certain season. Compared with an "epidemic" disease, which causes a high number of infections exceeding normal predictions, an endemic disease spreads relatively gradually on a smaller scale, remaining within the predicted scope. A "pandemic" disease, on the other hand, is an epidemic disease that occurs simultaneously all over the world.
  5. To be achieved by such means as abolishing restrictions on the number of entrants and purposes of travel, making immigration screening more efficient, or simplifying and cutting down on checks at the place of arrival (i.e., the airport)
  6. An energy mix that makes safety (S) its prerequisite while balancing the three "E's": energy security, economic efficiency, and environmental conservation.

Comprehensive Strategy