Toward realization ofthe new economy and society- Reform of the economy and societyby the deepening of “Society 5.0” -- Outline April 19, 2016
Keidanren(Japan Business Federation)

Table of contents
I. Introduction..... 2

II. Current situation..... 4

III. The new economy and society
to be aimed at..... 9IV. Issues toward realization(Breakthrough of the walls)..... 13

V. Industry's initiatives..... 20

VI. Conclusion..... 241

Table of contents
I. Introduction
II. Current situation
III. The new economy and society
to be aimed at
IV. Issues toward realization(Breakthrough of the walls)
V. Industry's initiatives
VI. Conclusion
2”Great reform age”, where IoT, AI, robots
and life science will drastically change
industrial and social structures, has arrived.
Although great reform movement has becomea worldwide trend, Japan has embarked on such initiative onlyrecently.
As forerunner of finding solutions to emerging problems, it isimperative for Japan to promote a nation-wide innovation acrossthe whole economy and society.
We therefore make this policy recommendations regarding 1) theconcept, 2) issues to be addressed, 3) actions to be taken by thegovernment, and 4) initiatives of the industry.
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Table of contents
I. Introduction
II. Current situation
III. The new economy and society
to be aimed at
IV. Issues toward realization(Breakthrough of the walls)
V. Industry's initiatives
VI. Conclusion
4

Technological background The foundation to underpin the reform is a creation of new values
by integration of cyber space and physical space (CPS) with rapid
evolution of ICT as a background.
 Value creation is also accelerated by AI and robots based on CPS.
Implementation bymachines and robotsAnalysis by AI, etc.

※ CPS：Cyber Physical Systems

Data collection bysensors and devices

Accumulation as Big Data

※ VR：Virtual Reality
AR：Augmented Reality

5Initiatives in foreign countries - Companies  Innovative business models have been created mainly led by
European and U.S. companies.
 Conventional industrial structures are anticipated to drastically change.
Evolution of the manufacturing industry
 Transition from a conventional model (make profit by simply selling products) toa new model (make profit by service as a whole including after-sales care) Materialization of custom-made mass production corresponding to individual
consumers’ needs
Connected car and automated driving
 Realization of “Evolving Vehicles.” It will be possible to update functions ofvehicles just like smartphones.
 Realization of fully automated driving will make the interior of a moving vehicle
a living room.
Health management by wearable devices
 Health condition will be monitored in real time and analysis result will be utilized forpreventive medicine and therapies, etc.
FinTech By utilizing ICT, it will be possible to support existing financial businesses and toprovide new services taking substitutions into account.

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Initiatives in foreign countries - Nations The importance of IoT drives nations to proactively take initiatives.
Nations

Characteristics

Germany In its 2010 “High-Tech Strategy 2020,” the country published “Industrie 4.0.”
 Utilizing latest technologies including IoT in the manufacturing industry, by the reform of supply
chains of the manufacturing industry that have factories as a starting point and the entire value
creation process, it aims at (1) enhancement of competitiveness as a production base of highvalue added products, and (2) enhancement of competitiveness as an export base that
distributes machine tools and modules needed for the manufacturing all over the world.

Industrie 4.0

U.S.
Industrial InternetEstonia
e-Estonia

Singapore
Smart Nation

 In 2012, it was proposed by General Electric as a “Industrial Internet” scheme.
 By combining industrial equipment and analysis software, added values such as cost reduction
are created and the Industrial Internet system covers 5 areas including manufacturing, energy,
healthcare, public sector and transportation.
 Dissemination of a common software platform “Predix” is also a target.
 Since around 2000, whole nation of Estonia has been promoting “e-Estonia” policy which aims to
make the entire country an information‐oriented nation.
 ID card is issued to all people over 15 years old and carrying it is mandatory to promote online
public services. This ID card can be used as a driver’s license and health insurance card, also it
is utilized over 3,000 private sector services such as company registration and payment of taxes.
 Aiming at becoming the world’s first smart country, Singapore addresses its national strategy“Smart Nation.” Various sensors are installed all over the nation and real time data is shared byministries and government offices to realize the creation of a nation which is safe and convenient
to live.
 By integrating various data to “Smart Nation Platform,” uses and applications have beenpromoted.
* Other than the above, EU, China and other countries have started their initiatives.

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Japan’s initiatives - Society 5.0  Initiatives of individual companies have been progressing,
however, national strategy has not been complied.
 Under such circumstances, Society 5.0 concept has been introducedin the 5th Science and Technology Basic Plan.

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Table of contents
I. Introduction
II. Current situation
III. The new economy and society
to be aimed at
IV. Issues toward realization(Breakthrough of the walls)
V. Industry's initiatives
VI. Conclusion
9Image of the new economy and society
 Aims at the new economy and society which focuses on individuals.
Reform of individuals=> Increase the power of individuals
Every individual including elderly people and women
can live safe and secured comfortable and healthy lifeand each and every individual can realize his/her
desired lifestyle.

Reform of companies=> Provide new values
Improvement of productivity through digitization andreform of business models are promoted, and at thesame time, the new economy and society will be
realized by promoting innovation and globalization.

Solving social issues=> Create future
Efforts are made to solve a pile of issues of our country
such as falling population, super aging society and natural
disasters so that rich and vigourous future will be realized.
Through overseas expansion of new businesses andservices, we can contribute to solving global scale issues
as well.

10Viewpoints toward realization of
the new economy and society•To provide new values and services through reforms with needs
arising from national challenges as a momentum.

•To utilize strength of physical space in the competition of CPS,•

To capitalize on 1) creative capability of “disruptive innovation” and“innovation based on social issues”, and 2) "invisible manufacturing"(software).

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The new economy and society
to be realized by creation of future
Falling population
Decline of industrial
competitiveness

Smart society
undaunted by the decrease of population

Super aging society
Lack of women's
active participation

Society in which every individual
including elderly people and women
can actively participate

Disasters & terrorism
Decrepit infrastructure

Safe and secured society
in both cyber and physical spaces

Environmental problems
Lack of resources
and water

Society that contributes to the solutionof global environmental issues
12Table of contents
I. Introduction
II. Current situation
III. The new economy and society
to be aimed atIV. Issues toward realization(Breakthrough of the walls)
V. Industry's initiatives
VI. Conclusion
13

Breakthrough of the "Five Walls"
 It is imperative to break through the "five walls" to realize the neweconomy and society in which discontinuous and disruptive changes are
expected to occur.
Wall of the Ministries and Agencies
Formulation of national strategies and integration ofgovernment promotion system

Wall of the legal system
Development of laws
toward implementation of advanced techniques
Wall of technologies
Formation of the knowledge foundation
Wall of human resources
Dynamic engagement of all citizens
in the new economy and society
Wall of social acceptanceIntegration of advanced technologies and society

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Breakthrough the “Wall of the Ministries and Agencies”
 Formulation of national strategies
With involvement of industry and academia national strategies must be
formulated by the ministries and agencies in an integrated manner
toward realization of “Society 5.0.”
A handy IoT platform must be also architected.

 Construction of promotion system by unified effort ofgovernment departments


Manifold councils and promotion systems of each ministry and agency
must work together in an integrated manner to promote national strategiesintegrally and flexibly as a nation.
possibility is a system in which relevant government departments and industry work together* One
under overlooking and directions of the Council for Science, Technology and Innovation whose chairperson is
the prime minister. (“Society 5.0 Realization Council (tentative name)").

 Construction of a thinktank function

It is necessary to deploy necessary actions by backcasting from the image of
future economy and society. It is worthy to establish a cross-sectional full-time
thinktank function of ministries and agencies in which private sector
participates.

15Breakthrough the “Wall of the legal system”
 Development of rules
for promoting uses and applications of dataData is an extremely important key factor. Quality, quantity anddistribution speed of usable and applicable data are directly connected
not only to convenience of individual people’s lives but also competitiveedge of companies and countries.

Construction of an international framework is also necessary.

 Promotion of regulations and system reform

There is a possibility of current regulations to obstruct innovation.

Including next generation automobiles, unmanned aircrafts androbots, further reform must be promoted taking into consideration
citizen’s voice.

 Promotion of administrative digitization
 Examination of intellectual property related legislative system
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Breakthrough the “Wall of technologies”
 Technologies to be promoted

It is necessary to promote technologies such as cyber security, AItechnologies, robotics, nano, bio and systems science andtechnology.

 Improvement of environment related to innovation ofscience and technology
It is essential to secure “1% of GDP, a total amount of 26 trillion yen”
government investment into R&D which is stipulated in the 5th
Science and Technology Basic Plan.

It is necessary to continue and expand the scale and themes ofinnovative government R&D projects such as SIP and ImPACT, and toreform national innovation system.

In order to encourage private investments, maintenance andexpansion of the R&D tax system are essential.
* SIP: Cross-ministerial Strategic Innovation Promotion Program* ImPACT: Impulsing PAradigm Change through disruptive Technologies

17Breakthrough the “Wall of human resources”
 Educational reform
toward dynamic engagement of all citizens


It is necessary that all citizens become “human that think
independently and create new values by combining various items
while working with others.”

It is indispensable to provide education to foster creativity and toimprove IT literacy from the primary and secondary education levels
and promotion of lifelong education.

 Securing professional human resources

A pressing issue is securing and fostering human resources for cybersecurity, data science and international standardization which areconsidered to be essential to realize new economy and society.

One possibility is accepting professional human resourcesfrom overseas. The government should create an environment toaccept high skilled persons.

18Breakthrough the “Wall of social acceptance”
 Building a social consensus
 It is essential to share national vision among all
stakeholders to build a social consensus.
 Examination of ethical issues, social implications, etc.
 Taking advantage of the knowledge of humanities andsocial science, examination of Ethical, Legal and Social
Implications (ELSI) should be promoted by industry,
academia and government while developing techniques.
 The examination must cover from the relationshipbetween humans and machines (AI and robots)
to philosophical issues such as definition ofindividual happiness and humanity.
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Table of contents
I. Introduction
II. Current situation
III. The new economy and society
to be aimed at
IV. Issues toward realization(Breakthrough of the walls)
V. Industry's initiatives
VI. Conclusion
20

Industry initiatives (1) - Open innovation  Clarification and expansion of “Non- competitive area”
In order to realize “Society 5.0” and solve social problems,“non-competitive area” will be clarified and cooperation among
domestic and foreign companies will be promoted to strengtheninternational competitive edge.

 Promotion of full scale joint studies throughthe cooperation of industry, academia and government
Jointly explores and shares visions, such as an image of
how a society in the future should be and issues and concentrates
various resources to promote full scale joint studies.

 Construction of an ecosystem by diverse companies


Through successful cooperation with start-ups, mid-sized enterprises
and small and medium businesses, an ecosystem that can contributeto improvement of productivity of the entire economy and society
will be constructed.
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Industry initiatives (2) Activities to expand market

To spread the concept of "Society 5.0" and expand the systemoverseas jointly by the government and private sector.
To promote strategic industrialization and standardization in an
integrated manner.
To strengthen human resources who tackle international
standardization while cooperating with universities and R&D
agencies.

 Promotion of human resource strategy
Business persons who play lively parts in the forefront ofbusiness world actively participate in the education of students
to foster human resources through the cooperation of industry,academia and government.
Promotes women’s participation to discover potential talents, andat the same time, positively accepts excellent foreigners so thatdiversity will be improved.
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Industry initiatives (3) - Our own structural reform  Reform of organizations and awarenessIn order to be free from existing businesses, promotes organizational
reform and cooperation among departments, and at the same time,
improves the environment where each and every employee canexert his/her creativity as well as efficiency.
In order to promote diversity of human resources, treatment andpersonnel systems within companies will be revised taking into
consideration the diversification of sense of values among individuals.

 Reform of work styleIn the new economy and society, it is expected that role of humans
will change drastically due to reasons such as creation of
new jobs and disappearance of existing jobs.
Promotes an increase of job mobility to create an environment
where diversified and flexible ways of working can be accepted andeach and every person can play a lively part.
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Table of contents
I. Introduction
II. Current situation
III. The new economy and society
to be aimed at
IV. Issues toward realization(Breakthrough of the walls)
V. Industry's initiatives
VI. Conclusion
24

A new age which has leading-edge technologies
as its foundation is not necessarilyon the extension of the current line.
It is also an age full of “uncertainties.”
Because of its uncertainties, industry must create
reform on its own initiative to lead the world.
These policy recommendations are just astarting point toward the reform of economyand society. We will further deepen ourexamination for individual issues to disseminate
our opinions.
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