Provisional Translation

Action Plan of the Growth Strategy

June 21, 2019

Provisional Translation

Action Plan of the Growth Strategy(Table of Contents)
Chapter 1 Fundamental perpective ............................................................... 1
Chapter 2 Realization of Society 5.0 ........................................................ 15
1. Definition of rules for the digital market ............................................. 15
2. Fintech/finance ..................................................................................... 20
3. Mobility................................................................................................. 22
4. Corporate governance .......................................................................... 26
5. Smart public services............................................................................ 28
6. Next-generation infrastructure ............................................................. 29
7. Aiming for realization of a carbon-free society ................................... 29
Chapter 3 Reforms to Social Security System for All Generations ............. 32
1. Securing employment opportunities up to the age of 70 ...................... 32
2. Promotion of mid-career hiring and experienced personnel hiring .... 35
3. Prevention of disease and nursing care ............................................... 35
Chapter 4 Reinforcement of Regional Measures under Population Decline...................................................................................................... 41
1. Maintenance of Community Infrastructure and Competition Policy ... 41
2. Supplying human resources to regions ................................................ 45
3. Revitalization of communities with rapidly declining populations ...... 46
4. Tourism development ........................................................................... 46
5. National Strategic Special Zones ......................................................... 46
6. Increase productivity of SMEs and micro businesses .......................... 46

Provisional Translation
Chapter 1 Fundamental perspective(1) Background
AI, IoT, robots, big data, blockchain, and other Fourth Industrial Revolution digitaltechnologies and data utilization are general purpose technology (GPT) that broadly affect allindustries, similar to adoption of electric power from the 19th to 20th century and IT inroads
through the end of the 20th century.
Japan needs to revamp its overall socioeconomic system, including the format of corporate
organizations and the content and format of individual work, in order to fully harness thepotential of new GPT from the Fourth Industrial Revolution to improve productivity andrealize economic in the new “Reiwa” era.
The Fourth Industrial Revolution will bring about structural change from uniform
competition focused on costs to competition for acquisition of added value. This is competition
for creation of new products and services with high added value that relies on the extent towhich corporate executives fully utilize digitalization and achieve differentiation. Creation andacquisition of added value are key issues.
The Fourth Industrial Revolution will also heavily affect the labor market. Polarization issteadily advancing in the labor market worldwide due to decline in mid-skill work andincreases in high-skill and low-skill work. To expand high-skill jobs, it is vital to cultivate
human resources who possess capabilities and skills that cannot be replaced by machinery andAI, such as creativity, instinct, design, and planning.
Whether “organizational” and “human resource” reforms advance in these ways in responseto the Fourth Industrial Revolution will determine whether it is possible to enhance laborproductivity through creation of added value.
(2) Government and policy reforms
The pace of changes occurring with the Fourth Industrial Revolution is fast and sudden, andthe world is changing significantly. Japan’s ability to be a leader in the Fourth Industrial
Revolution depends on whether the government is capable of preparing timely and detailed
response measures and getting the private sector to take detailed action based on thesemeasures. The next 1-2 years are critical.
To accomplish this, the entire government needs to promptly prepare the environment,
including necessary legislation, and should seek to complete the formulation of national-level
fundamental infrastructure and rules in the 2020 Ordinary National Diet Session.
Japan continues to promote bold monetary policy and dynamic fiscal management under
Abenomics, and the government should also take the lead in open innovation initiatives, suchas promoting mobility of human resources, and implement deregulation to encourage newentrants and stimulus and secure the sustainability of economic policies.
(3) Organizational reforms
Corporate innovation activities are important in realizing the Fourth Industrial Revolution.
Expectations remain strong for venture companies as drivers of innovation, and assistanceshould be given. However, the role of existing companies and large companies with abundant
capital and personnel resources is also important in the Fourth Industrial Revolution because
it requires investments in R&D work with a lengthy gestation period.
Japan’s labor productivity growth rate was lower than rates in the United States and United
Kingdom in 2001-07 (Figure 1). Since 2011, meanwhile, Japan has the top growth rate among
G7 countries (Figure 2).

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Provisional Translation

Figure 1 Annual average growth rate of real laborproductivity per hour (2001-07)

UnitedStatesUnitedKingdomJapan

Germany

FranceCanadaFigure 2. Annual average growth rate of real laborproductivity per hour (2011-17)

Italy

Japan

CanadaGermany

FranceUnitedUnitedStates Kingdom

Italy

Nevertheless, the absolute value of Japan’s labor productivity is still low at just 65% of thelevel in the United States (Figure 3). Since productivity is based on “selling price – cost,” there
is debate as to whether high costs or low selling prices are responsible for Japan’s low laborproductivity.
Markup rate data are useful in confirming this point. The markup rate is a measure of themultiple of price to manufacturing cost in actual sales and uses cost as the denominator(marginal cost) and selling price as the numerator. If the value is 1, the selling price is justcovering costs.
While US and European companies have rapidly raised their markup rates since 2010,
Japanese companies remained at low rates (Figure 4).
Figure3. Real labor productivity per hour incomparison to the United States (2017)

Figure 4. Trends in markup rates of companies in developed
Corporate markup rate
(times)US

EuropeJapan(year)
UnitedStatesGermany

FranceCanadaUnitedKingdom

Italy

Japan

Markup rate distribution in the United States was concentrated near 1x, which meant thatprices were just covering costs, in 1980. In 2016, meanwhile, its markup rate is rising to theright with a long tail (Figure 5). This shows increase in the number of companies capable ofobtaining healthy prices thanks to the Fourth Industrial Revolution and other reforms.
In other developed countries besides the United States, corporate markup rate distribution
is changing in the same way (Figure 6). While some companies with high markup rates are
emerging in Japan too, the change margin is very small compared to other countries (Figure
7).

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Provisional Translation

Figure 5. Distribution of markup rates in US companies
1980

2016

Decrease in companies with low markup rates

Increase in companies with high markup rates
Emergence of companies with very high markup rates

Figure 6. Distribution of markup rates in companies in developed countries
1980

2016

Decrease in companies with low markup rates

Increase in companies with high markup rates

Emergence of companies with very high markup rates

Figure 7. Distribution of markup rates in Japanese companies
1980

2016

Decrease in companies with low markup rates

Increase in companies with high markup rates
No emergence of companies with very high markup rates

A core issue for raising Japan’s labor productivity is creation of added value from the3

Provisional Translation
customer perspective. In other words, Japan must strive to raise the markup rate andprofitability through utilization of Fourth Industrial Revolution digital technologies and data
to create new products and services with high added value.
Real data is a strength for Japanese companies. Japan needs to leverage real data and realworld (physical space) knowhow, its expertise, and bolster initiatives in virtual space (cyber
space) through public and private efforts.
To achieve this, it is necessary to build an environment capable of using data, the biggest
resource in the Fourth Industrial Revolution, and creating innovation ahead of the world. Japan
should take a leading role in realizing privacy protection while still enabling free distributionof data in international society. These efforts will help in fostering more intelligent andprosperous regional living and national lifestyles and also in resolving global issues, such as
global environmental problems and aging.
(4) People reforms① Creating jobs with high added value
The Fourth Industrial Revolution is heavily affecting the labor market structure too. A
primary example of this structural change is polarization.
In the United States, mid-skill production, sales, and administrative jobs are declining,
while low-wage care, cleaning, and personal service jobs and high-wage technology andspecialty jobs are increasing (Figure 8). Similar polarization is starting to occur in Japan too(Figure 9).
Figure 8．Change in worker share by occupation in the US (ages 16-64)

Specialist

Technical

Sales

Administrative

Manufacturing

Management

High-skill

Mid-skill

Driving andhandiwork

Cleaning and security
services

Medical and personal
services

Low-skill

Figure 9．Change in worker share by occupation in the US (15 and older)

4

Management

Specialist

Technical

Sales

Manufacturing

Driving andhandiwork

Cleaning andsecurity services

Medical andpersonal services

High-skill

AdministrativeMid-skill

Low-skillProvisional Translation“People” are the driving force that supports economic growth. To promote utilization of thecapabilities of each person amid dramatic innovation and the prospect of sharp decline in theyounger generation, it is essential to accelerate investments in human capital in society as awhole and build structures that enable people to attain high-skill jobs.
Companies and individuals must respond flexibly to change and strengthen resilience toshocks in an era of significant change driven by the Fourth Industrial Revolution andpopulation decline. This requires expansion of diverse, flexible corporate organizations andcultures toward work styles to accommodate forces of decentralization and personalization
unleashed by the Fourth Industrial Revolution.
Japan needs to realize a new value creation society that increases true mobility and lets
people conduct work with high added value by freely utilizing their personal capabilities
without restriction by organizations through reforms to liberate people from constraint andstagnation in organizations and giving them opportunities to engage in different worlds.
As the Fourth Industrial Revolution advances, human capabilities that cannot be replacedby machinery and AI, such as creativity, instinct, design, and planning will increasingly create
added value. To expand employment with high added value in response to polarization of thelabor market, it is necessary in the educational system, including elementary school, tocultivate human resources with excellent capabilities in respective areas by shifting from mass
output of mistake-free education to respect for various approaches and different ideas.
Furthermore, the Fourth Industrial Revolution is creating a wage premium for people with
graduate degrees. Wage-premium fields that pay premiums to master’s and PhD degree
graduates, using bachelor degrees as 0%, are basic and fundamental fields, such as psychology,
art, communications, literature, and physics in the sciences (Figure 10). These results indicatethat the basic portion is the issue when combined with AI. Japan needs to strengthen liberalarts education, regardless of arts or science programs, including in graduate school education.
Universities possess diverse knowledge that is a vital source of added value in a knowledgeintensive society. It is important to expand the role of universities and utilize them as a drive
force of innovation.
Companies also must promote increased use of people with graduate school degrees. They
need to promote reinforcement of basic data and AI literacy too.
Figure10. Increase in lifetime wages for graduates in the United States (per department)
Science graduate school

Liberal arts graduate school
Mast
er’s

5

PsychologyLiterature

PhD

Communications

Art

Social Science

Business

Physics

PhD

Engineering

Math and computer science

Mast
er’s

Provisional Translation
While individual workers need to take initiative on their own in developing capabilities andforming careers, companies must assist in harnessing the capabilities of employees throughadditional education. Japan also needs to continue provision of recurrent education for learning
again at anytime and on multiple occasions to address changing times after people havebecome full members of society.
② Expansion of flexible and diverse work styles
Japan must promote a model change that adjusts Japan-style employment practices premisedon lifetime employment and seniority to accommodate changes in society and encourage
diverse hiring and work styles.
Along with revisions to the approach of bulk hiring of new university graduates currently
progressing, Japan needs to expand career hires of mid-career and experience personnel andpromote changes to employee assessment and compensation systems.
To support this process, it is important to provide an environment in which students andothers seeking employment can join companies with an understanding of their employment
policies. The government should pursue more transparency by calling on individual large
companies to disclose information on the percentage of mid-career and experienced hires inlight of the current handling of mid-career and experienced hiring results as a selective
disclosure item.
③ Expansion of side jobs and second jobs
Despite an upward trend in people who want to have side jobs in recent years, the numberof people who actually have side jobs has been flat (Figure 11).
Looking at the relationship to creation and acquisition of added value for main-businesscompanies, many people engage in side businesses in areas that differ with their man business(except for the “medical and welfare” industry) and this activity provides opportunity for the
main-business company to accumulate diverse experience (Figure 12).
Figure 11. Trends in people who want or have side jobs
（ten thousand people）

People who want to have side jobs
People who have side jobs

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Provisional Translation

Figure 12. Percentage of type of side job by industry
210 thousand people

120 thousand people

190 thousand people

200 thousand people

110 thousand people

100 thousand people
Other

Other

Other
Other

Manufacturing
Accommodationand food services

Manufacturing
Educationand tutoring

Manufacturing

Medicaland welfare

Accommodation

Accommodation
Food services

Education
andtutoring

Other

Wholesaleand retail

Education
andtutoring
Wholesaleand retail
Other
services

Other

Manufacturing

Manufacturing

Accommodation

MedicalFood services

and welfare

Other

Education andtutoring
Medical andwelfareMedical andWholesaleand retailwelfareFood services

Education
andtutoring

Medical andwelfareAccommodation
Food services

Other
services
Other
services

Wholesaleand retail

Wholesaleand retail

Same

Other
services

Same
Same

Same

Same
Same

Medical and welfare

Wholesale and retail

Other services

Education and tutoring

Accommodation
Food services

Manufacturing

Additionally, survey results for people engaging in side business show that 90% hadheightened awareness of their main business or no change and 20% felt stronger motivation in
their main business (Figure 13).
In fact, among high-level human resources involved in thinking and analysis, people withside jobs earned 36% higher wages in their main business than those without this activity(Figure 14). This suggests that lowering corporate boundaries and letting high-level employees
hold a side job enhances the value of main business.
Furthermore, while leaving a corporate job to create a business entails risk anywhere in theworld, a majority of people launching new businesses retains their existing jobs to alleviate
this risk in other countries (Figure 15).
Figure 13. Influence on main business by side jobs
IncreasedLoyalty to the main business

Awareness of
main business

Awareness of goal
achievement in main business
Consciously contributing
to main workplace
Motivation towards main
businessState atmain business

Focus given to main business
Efficiency inthe main business7

No change

Decreased(People with side jobs=1,082)

Provisional Translation

Figure 14. Impact of side job experience on main business wages
Movementtasks

Communicationtasks

No clearcorrelation

思考・分析
Thinking
and analysis tasks
タスク
Note: The graph shows wage increase as a comparison of36％
employees with side jobs (volunteers) and employees
without side-job experience. Wage refers to wage per hourof main business work. The work types are work that mainly
requires movement capabilities for “movement tasks”(manufacturing, construction, transportation andcommunications, etc.), work that mainly requires people
skills for “communication tasks” (services, sales, etc.), andwork that mainly requires thinking and analysis skills for“thinking and analysis tasks” (management, specialty andtechnical, information processing technician, etc.).

Figure 15. Breakdown of high-tech industry entrepreneurs in Sweden

People who start abusiness as a sidejob
966 people

People who start abusiness as amain job1225 people

peoplepeopleNote: Among high-tech industry entrepreneurs in

People with a main
business that camethrough startinga side job

Sweden, 40% start as a side business. Also,
20% originally started their main business as aside job.

about

Expansion of side or second jobs increases personal income, generates feedback to the main
business via acquisition of skills and experience, and facilitates transition to and preparationfor other job options in the future in an era of a 100-year life. Japan must foster an environmentthat helps interested people pursue side or second jobs by addressing concerns about work
hours and health management through accelerated clarification of key issues as well as
promotion of model work rules in side or second job situations and provision of initiative
examples. It is also necessary to promote entrepreneurship via side or second jobs.
Technology advances are increasing new job formats for people working on their own thatinvolve obtaining short-term or one-time jobs over the Internet. This is known as the Gig
Economy. In particular, it is contributing to expansion of work opportunities for seniors(Figure16). With data showing that just under 70% of society in the middle-aged and senior
segments at 40 years old and above in Japan (Figure 17), the Gig Economy offers thepossibility of expanding employment of seniors.
Self-run business owners and freelancers also report a higher level of satisfaction thancompany employees. This includes large discrepancy in “sense of achievement and fulfillment”
and “skill, knowledge, and experience enhancement” (Figure 18). Japan must develop andenvironment that give individuals an option to select self-run business and freelance paths.

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Provisional Translation

Figure16. Change in employment ratio due to Gig Economy (1995-2015)

Figure 17. Age distribution of “freelancers” in Japan
60s and older

20s

30s
50s

40s

Figure 18. Comparison of the level of satisfaction between individual business owners, freelancers, andcompany employees

Sense of achievement and fulfillment

Skill, knowledge, and experienceenhancement

Personal relationships at work

Working environment(time spent working, workplace,etc.)
Compatibility with private life

IncomeIndividual business owners and freelancers n=869
Company employees n=1,030
Social status

Satisfaction
Satisfaction

Very satisfied
Very satisfied

9

Provisional Translation④ Provision of infrastructure to expand diverse work formats
Japan must expand application of employee insurance to workers with short hours andothers with the aim of realizing social insurance for all workers and thereby addressing
expansion of diverse work formats.
(5) Promoting open innovation① Importance of the role of existing companies
Common wisdom had been that cultivation of venture companies and new stock listings
were a shortcut in promoting innovation that creates added value. This view led to theconclusion that Japan’s low number of new stock listings was an issue.
However, the number of newly listed companies in Japan has been steadily rising in recent
years, and Japan surpassed the United States in new listings in 2016 (Figure19). It is also worth
noticing that the number of newly listed companies in the United States has been declining
since 2014. A reason for decline in new listings in the US is that acquisition from an existing
company is more attractive than a new listing in terms of access to internal funds and ease ofdeveloping technology with a long gestation period (Figure 20). The behavior of existing large
companies hence is an important factor in fostering innovation.
Figure19. Number of newly listed companies bymarketFigure 20．Number of venture company IPOs and M&A
deals（Companies））(number of cases)

United States

Japan

Japan

US

2014

Japan

US

2015

Japan

US

2016

Japan

2017

In fact, analysis of national labor productivity improvement factors shows a larger
contribution from existing companies than new-listing companies in both Japan and the UnitedStates. Structural reforms at existing large companies are driving improvements (Figure21,
Figure 22).

10

US

Provisional Translation

Figure21. Factor analysis of labor productivity (US)Existing listed companies
factorLabor productivity growth
rate

Newly listed companies
factorDelisted companies factor

Figure 22. Factor analysis of labor productivity (Japan)

Existing listed companies factor

Labor productivity growth
rate

Newly listed companies
factorDelisted companies factor② Current situation at existing companies
Japan has more companies with a lengthy history of over 10 years than other developed
countries (Figure 23). While some observers believe this is a hurdle to innovation, profitability
tends to be higher at companies with a longer corporate age in the United States (Figure24).
This result indicates that existing large companies are growing by proactively entering new
fields and acquiring innovative venture firms.

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Provisional Translation

Figure 23. Corporate age distribution

Over 11 years

6-10 years

3-5 years

0-2 years

Italy

Japan

UnitedStatesCanadaFranceUnitedKingdom

Figure24. Relationship between corporate age and profitability (ROA)US Companies

Japanese Companies(Corporateage)

US companies are also successfully lifting profitability by expanding scale and diversifying
businesses. Japanese companies, meanwhile, tend to have lower profitability as they becomelarger and diversify due to build-up of non-core businesses. This difference might reflect a gap
in internal capital market utilization efficiency at existing companies (Figure 25). Japaneseexisting companies hence have the potential to achieve results by investing internal businessresources in new areas.
Figure 25. Operating income ratio by size and degree of diversification of Japanese and US
companies (2000-2012 annual average)
Scale
Small
Diversification degree

Medium

Large

Very
Large

Japan
Professional
Occupation

Diversification degreeSpecialization: up to 10%
Semi-specialization: 10% to 30%
Semi-diversification: 30% to 50%

US
Japan

Quasispecialization

US

Scale (sales)
Small：up to 50 billion yen
Medium：50 billion yen to 500 billion yen
Large：500 billion yen to 2 trillion yen
Very large: 2 trillion yen and above

Japan
Semidiversificatio
n

US

US
Diversification

Japan

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Provisional Translation

Empirical research utilizing a corporate database conducted jointly by management andeconomic researchers at Harvard, Stanford, MIT, and other universities discovered thatmanagement quality is more important than IT investment budgets in determining productivity(Figure 26). This is why companies need to promote improvement in management quality bylinking compensation and promotions to results (Figure 27).
Existing companies need to allocate internal funds to new areas and areas with high risk andsubstantially moved forward with investments in new businesses and venture companies thatcan provide a future growth foundation. These efforts should involve utilization of a “separate
unit” with independence from the company itself and a management style that simultaneously
promotes both mature and new businesses. Corporate governance reforms, meanwhile, havereached a point of needing to move beyond just formalities and shift to genuine management
reforms.
Figure27. Comparison of management scores forJapanese and US companies

Figure26. Productivity (TFP) differences in US
manufacturing

US
Japan

Japan USManagementscore (total)

Qualityof
経営の質
management

R&D expenses

Low benefits forweak results

Benefits for thetalented segment

IT investment per
worker

③ Promotion of open innovation
While the open innovation implementation rate for Japanese companies is low, joint
activities with universities and public research organizations in deciding and solving issues arecomparable to the US and Europe.
Meanwhile, Japan has collaboration among companies, such as existing companies andFigure 28．Open innovation implementation rate and partner comparison
Open innovation partner

Open innovation implementation rate

Problem/issue definition stage
US/European companies
Universities and publicresearch entities
Japanese companies

起業家・スタートアップ企業
Entrepreneurs and startups
競合企業
RivalsProblem/issue resolution stage

US/European companies

Universities and publicresearch entities
Japanese companies
Entrepreneurs and startups
起業家・スタートアップ企業

US/Europeancompanies

Note:

Japanesecompanies

競合企業
RivalsPoints on the horizontal axis of the right chart show time spent on open innovation and percentages of time by partners;
calculated as the average value for respondents(0 = 0%, 1 = More than 0% and less than 25%, 2 = 25% to less than 50%, 3 = 50% to less than 75%, 4 = Over 75%)

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Provisional Translation
start-ups and between existing companies, than in the US and Europe (Figure 28).

To take the fullest advantage of possibilities offered by the Fourth Industrial Revolution,
Japan needs to support creation of new venture companies and existing companies must movebeyond the closed and retention approach to human resources, technology, and capital andtransition to open and collaborative organizational management.
In recent years, exit strategies for venture companies in the United States have shifted from
IPOs to outright sale to another company. This change reflects the growing importance ofcorporate acquisitions as a source of funds versus new listings on the stock market that faces
an information gap regarding the potential of technologies held by venture companies in the
Fourth Industrial Revolution.
In Japan, while collaboration with universities and public research entities had been thefocus of open innovation, it is important to engage in Co-Opetition as a new way of creating
added value that involves cooperating in areas where cooperation makes sense and competing
when competition is appropriate. Large companies, SMEs, ventures, universities and others
should dynamically collaborate in an open shared business approach. It is necessary to proceedwith collaboration between large companies and venture companies, acquisitions of venturecompanies by existing companies, and collaboration between rival existing companies.
Specifically, Japan must consider preparation of an environment that facilitates businessreorganization, expands corporate venture capital, and promotes R&D among companies.

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Provisional Translation
Chapter 2 Realization of Society 5.0
1. Improvement of rules for the digital market
Summary
Global data volume has been rapidly expanding in recent years. Digital platform
companies are dramatically increasing potential access to global and other markets for
SMEs, small business, ventures, and individual users.
Users, meanwhile, have expressed concerns about the difficulty of direct negotiations,
one-sided rule changes, and high usage rates. These conditions highlight the need to
improve legislation and guidelines for ensuring transparency and fairness in transaction
practices.
Another concern is the threat of hindering competition via data monopoly in digitalmarkets. Similar action is also needed.
Coordination of competition policy in the digital market requires high-level expert
knowledge and also overcoming vertical divisions among ministries and agencies in orderto facilitate timely responses amid accelerating changes. Japan intends to develop a newframework for these issues.
(1) Current situation
Digital platform companies are expanding their business scope from the digital world ofsimple mail (messaging), searches, and contents to real-world fields such as retail at actual
stores, IT-based smart homes, and automated driving.
Digital platform companies dramatically improve potential access to global and othermarkets for SMEs, ventures, and freelancers (these advances are known collectively as the Gig
Economy). Many observers acknowledge specific benefits, such as acquisition of new
customer development opportunities, reduction of revenue collection costs, and ability to use
production and sales tools.
Common issues raised about digital platform companies, meanwhile, are difficulty of direct
negotiations, one-sided rule changes, high usage rates and fees, and arbitrary and uncertain
search results. A majority of respondents also mention difficulty in switching the digitalplatform company they work with (Figure 29). There have been frequent incidents of digitalplatform companies abusing their dominant position.

Figure 29．Digital platform company benefits and problems
1. Benefits of using digital platform companies

2.Digital platform company problems（Companies））

Difficult to negotiate individually

Rules

Acquisition of new customer
development opportunities
Sales collection cost savings

Disadvantages from one-side changes to terms of service

Ability to use production and sales tools
Transaction
terms

Irrational and unfair termination and penalty terms

Utilization of customer and sales situation data
Increase in trust through evaluations and reviews

Sales collection cost savings

High user fees and commissions
Requests for most favored status

Search data

Arbitrary or unclear search results

Provision of effective sales and promotional
services

Excessive restriction of access to data
Yes

3.Difficulty changing digital platform companies
Very difficult
Difficult
Neither
Easy
Very easy

15

NeitherNo

Don’t know

Provisional Translation<Examples of incidents involving digital platform companies>■ Amazon e-book incident (June 2015)
EU competition authorities conducted a survey of alleged competition restrictions by Amazon (US)through a provision that requests business partners to give Amazon at least the same terms in cases ofoffering a contract with better terms than for Amazon to another distributor (so-called most-favored nation
treatment).
⇒ In 2017, Amazon promised the EU competition authorities that it would not use this provision.
■ Google Shopping incident (June 2017)
EU competition authorities conducted a survey of alleged illegal favoring of Google’s (US) own service
through abuse of the dominant position of its search engine by giving priority display of the shopping
service it provides.
⇒ Authorities levied a EUR2.42 billion (314.6 billion yen) penalty against Google for violation of EU
competition law.

Furthermore, data monopoly in the digital market poses a threat of hindering competitioneven if a company’s sales only hold a small share of the market. Some observers have notedthat anti-trust authorities are not giving sufficient consideration partly due to their weakknowledge of the digital market.
In the United States and Europe, authorities are putting efforts into development ofcorporate combination review methods, including data value assessments. Japan also needs towork on developing corporate combination review methods, including suitable evaluation ofdata value, while collaborating with US and European authorities.
<Example of an issue related to inadequate assessment of data value in a business combination review>■ Facebook acquisition of WhatsApp incident (2014)① Facebook (SNS) proposed the acquisition of WhatsApp (SNS) for $19bn (2.09 trillion yen)
② The EU implemented a review of the possibility of integrating user data between the messaging appsof these two companies in the future. It prepared a future market forecast, including data assessment,
and decided to accept the company’s explanation about the technological difficulty of data
integration. Authorities approved the acquisition.
③ However, Facebook subsequently integrated data from the two apps, and this increased Facebook’s
dominance. The EU reversed its initial assessment and decided to levy a penalty of EUR110mn (14.3
billion yen) in 2017.

(2) Direction of government actions① Established an expert organization for assessing competitive conditions in the digitalmarket in the Cabinet Secretariat
Building a framework for global data distribution requires construction of a powerful andclear framework for data collection, storage, management, and distribution in Japan. Detailed
issues run across many ministries and agencies, including R&D on data security, developmentof shared, general-use data formats, promotion of data cleansing, ensuring privacy and security
for data distribution, promotion of a Society 5.0 cybersecurity framework, strategic
management from the standpoint of strengthening industrial competitiveness based on datatypes and structure ranging from sensitive technology to general technology information, andformulation of data portability and API disclosure policies.
The government hence plans to create an expert organization on domestic and overseas data
and digital markets (Digital Market Competition Headquarters (provisional)) comprised ofexperts with diverse and high-level knowledge across ministries and agencies. This
organization will be given authority to promote innovation through responses to a variety ofissues related to above-mentioned data usage, including data portability and API disclosure,authority to obtain survey results and other reports based on the Act on Prohibition of Private

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Provisional Translation
Monopolization and Maintenance of Fair Trade (the Antimonopoly Act) and other related laws
and regulations from the standpoint of defining and assessing the digital market where global
digital platform companies compete and promoting competition and innovation, and authority,
authority to plan and handle overall coordination of fundamental policies on the digital market,
authority to cooperate and collaborate with competition authorities of other countries.
Specific tasks include (a) assessing the competition situation in digital markets, (b)improving rules for a variety of platform businesses and conducting surveys and making
recommendations on issues related to the Antimonopoly Act, protection of personal
information, and other matters, (c) issuing recommendation on stimulation of the digitalmarket, including SMEs and venture companies, and (d) participating in rule formulation
process related to competition assessment in the digital market handled by the internationalframeworks such as the G7, G20.
The expert organization will bring together specialists from legal, economics, informationengineering, systems theory, and other fields, and the secretariat will broadly recruit
knowledgeable administrative officials from the Japan Fair Trade Commission General
Secretariat and Ministry of Economy, Trade and Industry, Ministry of International Affairs
and Communications, and other ministries in charge of digital-related policies.
The Digital Market Competition Headquarters (provisional) will build a strategic
framework for a data-driven society through close collaboration with the IT Strategic
Headquarters, the Cybersecurity Strategic Headquarters, and various ministries and agencies.
Additionally, under the Cabinet Secretariat, it shall also begin project management
throughout the year of a government information system aimed at achieving work reforms
from a service perspective and bulk requests and booking of budgets related to government
digital infrastructure.
② Improvement of rules to ensure transparency and fairness in transactions between
digital platform companies and users(Mergers and Acquisitions)
Data monopoly in the digital market poses a threat of hindering competition even if acompany’s sales only hold a small share of the market. Some observers have noted that antitrust authorities are not giving sufficient consideration partly due to their limited knowledgeof the digital market. Japan therefore needs to prepare guidelines and/or legislation to conduct
reviews of business combinations that include assessment of data value. Attention will begiven to avoid interfering with innovations in this process.
(Transparency and fairness of transaction practices, etc.)
Digital platform companies dramatically improve potential access to global and othermarkets for SMEs, venture companies, and freelancers (Gig Economy). However, transactions
between digital platform companies and users also face potential problems, such as (a) onesided application of contract terms and rules, (b) service additions and excess cost burden, and(c) excessive restrictions on access to data.
The government hence needs to improve legislation and guidelines to ensure transparency
and fairness of transaction practices and other unique relationships formed in the digital market
and aims to submit a bill to the National Diet’s 2020 Ordinary Session (the Act on Improving
Transparency of Digital Platformer Transactions (provisional)).
Meanwhile, consideration will be given in improving rules to use of rules that respectautonomy with a “comply or explain” approach initially for the purpose of avoiding
interference with digital innovation for the Fourth Industrial Revolution.
Specific consideration items will be clarification and disclosure of contract terms and17

Provisional Translationtransaction rejection reasons, clarification of rankings (order of presentation for product search
results), disclosure in cases of digital platform companies giving preference to their own
products and services, disclosure of requests for most-favored-treatment clauses (such as
clauses requesting the best terms among business partners), and an obligation to arrange acomplaint processing system.
③ Revision of the Act on the Protection of Personal Information
Regarding the Act on the Protection of Personal Information, the government aims to review
measures to prevent inappropriate use of personal information, including adoption of aframework that lets individuals ask companies and others to stop usage of their data, apply
provisions without discrimination to domestic and foreign companies, and adjust theframework to promote more utilization of anonymized information not sufficiently employed
up to now and submit a revisions bill to the National Diet’s 2020 Ordinary Session④ Promotion of data transfers and openness
The government plans to consider design of a detailed system for data portability and API
disclosure in specific areas, such as finance and medical. It will also improve rules suited tothe digital market for legacy regulations and other areas.
⑤ International DFFT discussion and WTO formulation of data distribution rules
To ensure reliability related to privacy, security, and intellectual property rights andfacilitate unfettered flow without national border concerns of data that is beneficial to resolving
business and social issues, it is necessary to seek promotion of data free flow internationally.
Japan aims to lead international discussion utilizing the G20 and other opportunities based on
the “Data Free Flow Trust (DFFT)” concept.
Furthermore, Japan intends to promote formation of an international consensus fordevelopment of high-level rules with as many member countries as possible in negotiations onrules related to electronic commerce transactions at the WTO, including data free flow.
⑥ Toward 5G development and realization of a G-Spatial Society
As part of efforts for realizing Society 5.0, 5G service launches in all prefectures by the endof fiscal 2020 and the government intends to provide necessary assistance for nationwide
deployment of 5G base stations, optical fiber, and other information and communications
infrastructure by telecom carriers and others, while also ensuring security, and accelerate the5G development plan by fiscal 2024. At that time, in order to realize regional revitalization,
pioneering local public organizations that have specific efforts to solve their own regional
issues will be given priority for support.
Furthermore, the government plans to promote social deployment of advanced technologies
using geospatial information with a goal of realizing a society with advanced utilization of
geospatial information (G-Spatial Society).
⑦ Refining regulations based on social deployment of digital technology
Some observers note that the regulatory framework is not keeping up with changes in waysof ensuring safety and reassurance amid rapid advancement of digital technology. The
government needs to implement regulatory reforms across industries in collaboration with theCouncil for Promotion of Regulatory Reform.
The High Pressure Gas Safety Act certifies business officess conducting sophisticated plantsafety using IoT and big data (permanent monitoring data) as super-certification sites as a18

Provisional Translation
refinement of the regulations. This certification approves a longer continuous plant operation
period than normal and provides significant streamlining of periodic inspections (from once a
year at normal sites to as long as once every right years). The government will consider
redesign of similar regulations for safety in other fields too.
In legislation related to finance and payments, the government is looking at refinement ofconsumer protection by promoting innovations in credit provisions, such as permitting credit
reviews that utilize technology and data under the Installment Sales Act. It plans to pursue
regulatory refinements in other fields as well.

19

Provisional Translation
2. Fintech/finance
Summary
Existing regulatory frameworks divided by industry, such as banks and service
providers, hinders flexible service provision by new entrants and others. The government
plans to promptly revise regulatory regimes for payments and other areas.
(1) Current situation
Existing financial regulations use frameworks that are fundamentally divided by industry,
such as banks and fund transfer service providers.
Particularly in the payments field, some observers note that the regulatory scheme divided
by business categories interferes with market entry by newcomers and flexible provision ofservices amid diversification of services in recent years (Figure 30).
Furthermore, the value and number of transactions handled by fund transfer services otherthan Japanese banks are steadily rising with advances by the Fourth Industrial Revolution(Figure 31).
“Business category” laws currently regulate providers of financial transaction agent andbroker services in general, not only in the payments field (Figure 32). There is concern about
interference with market entry by newcomers in these areas too.
Figure 30．Current financial legal system
Fund transfer services(fund transfer businesses)

Transportation IC cards, etc.
(prepaid payment method issuer)

Credit cards(comprehensive credit payment
broker)

Payments(limited to amounts less than one
million yen per time)

Payments(conversion not possible after
putting funds into the card)

Payments

Banks

Payments

Loans related to productpurchases, etc.

Loans

Services

Deposits (deposits can be put
toward loans)

Laws

Law composition

Retention of user funds(only available for payments)

Retention of user funds (onlyavailable for payments)

Fund payment method

Fund payment method

Installment Sales Act

Bank Act

Registration
systemRegistration system

License systems

Registration
systemFigure 31．Transaction trends for fund transfer service providers
左
軸
：
取
扱
金
額
（
単
位
：
百
万

1.1 trillion yen

Annual transaction value

Annual transfer volume

20

Fiscal 2017

Fiscal 2016

Fiscal 2015

Fiscal 2014

Fiscal 2013

Fiscal 2012

Fiscal 2011

Fiscal 2010

Left axis: Transaction value

右
軸
：
取
扱
件
数
（
単
位
：
件
）

Right axis: Transaction volume (cases)

84 million cases

Provisional Translation

Figure 32. Financial transaction regulations「Function」

Payments

Business
type

Electronic payment agent

Entry regulation format

Registration
制Side businessregistration

Notification of updates

Fiduciary
duty/loyalty
duty

Fiduciary
duty

Information provision
to avoid being
mistaken as banking,etc.

User asset
acceptance
Separate
management

Bank agent

Asset base
（Net asset value notnegative）

Compensation
capacity
protection

Conclusion anddisclosure of acontract with a bank(sharing damages
liability with the bank,etc.)

System maintenance
duty

Risk transfer

Asset management

Insurance offeror

Insurance broker

Approval

Registration
録制

Registration
録制

Registration
録制

Registration
録制

Approval

Notification

Notification

Notification

Disclosure duty for
multiple affiliations
with different fees
Prohibits abuse of
dominant position, etc.

Separate
management duty

User asset
protection

Systemmaintenance
Personnel criteria(qualifications,
etc.)

Fund
provision

Affiliate system(multiple allowed)

Affiliate
financialentity (yes/no)
Information
provision,prohibited
acts, etc.

Deposit receipt

Asset base（at least 5 million yen
in net assets(company)/at least
3 million yen(individuals)
Affiliation damages
compensation liability

System maintenanceduty
Sufficient knowledge
and experience

Financial product broker
品仲介業者

Investment advisor
助言業者

Fiduciary duty

Fiduciary duty
Loyalty duty

Affiliate system(multiple
allowed)）* Salespeople
assigned to financial
product brokers

Receivecompensation fromusers

Disclosure duty for
multiple affiliations
with different fees
Prohibits provisionof special benefits,etc.

Prohibited止Prohibits provisionof special benefits,etc.

Prohibited
止Fiduciary duty（Life
insurance
offerors canonly haveone
affiliation
as a general
rule）

Affiliate system

Explanation
duty incomparative
recommendatio
n sales in acase ofmultipleaffiliations
Prohibits provision of
special benefits, member
composition rules

Disclose receipt offees from insurers

Separate management duty
(bring inkan (seal))

Provision of a sales
deposit (5 million
yen)Affiliation damages
compensation duty

System maintenanceduty
Sufficient knowledge
and experience

System maintenance
duty
Passed test
(association rule

Affiliation damages
compensation liability

System maintenance duty
Passed sales person test
(bring inkan (seal))

Prohibits fee receipt
from users (bringinkan (seal))

Deposit (20 million
yen to 800 million
yen)/guarantee
consignment
contract/damages
liability insurance

System maintenance
duty
Passed test
（bring inkan (seal)）(2) Direction of government action
The government intends to revise the existing legal framework for financial and commercial
transactions divided by business categories and to pursue realization of a function-based,cross-segment framework that applied the same rules to the same functions and risks. It hopes
to promote entry by newcomers, innovations through competition among various services, andcompetition related to financial service quality.
(Payments)
The government plans to adopt a cross-segment framework in the payments field that has
been cited as an area in which the vertical structure by business segment under current laws
interferes with free selection of business models and services by service providers. Thisinitiative aims to realize flexible, highly convenient cashless payment methods, besides
existing bank fund transfers and conventional relatively high-sum credit card payments,
through market entry by newcomers and competition among various services by ①allowing
seamless payments that combine prepaid and postpaid formats (note 1) and ②creating a newfund transfer type positioned between banks and existing fund transfer firms and thereby
facilitating a wide range of fund transfers (note 2) other than just bank fund transfers. In thisprocess, the government also intends to introduce frameworks that enable smooth businessdeployment by fintech companies and other payment service firms, such as utilization of
performance provisions in credit reviews under the Installment Sales Act. It plans to submit
necessary bills for these changes to the National Diet’s 2020 Ordinary Session.
（Note 1）Seamless payments combining prepaid and postpone formats:
Facilitate provision of seamless payment service using prepaid, postpaid, and other formats throughadoption of a different system for small-sum, low-risk payments than the existing one for relatively

21

Provisional Translation
high-sum payments.
（Note 2）Non-bank fund transfers with a wide value range:
In addition to existing fund transfer business that handles fund transfers up to one million yen, create a
new type of fund transfer positioned between banks and existing fund transfer business and formulatea system that enables the transfer of funds exceeding one million yen with simpler regulations thanapplied to banks.

(Cross-segment legal framework)
The government intends to review measures for realization of a cross-segment financial
services brokering legal framework that allows provision across segments of services forvarious functions, such as payments, fund provision, asset management, and risk transfer. It
hopes that this initiative will enable provision of a highly convenient one-stop channel thatmeeting the needs of individual users utilizing smartphones and other devices, simplify
selection of financial services that meet personal needs by users, and encourage competition
for financial service quality. The government aim to prepare its fundamental approach for thisinitiative during 2019.

3. Mobility
Summary
Shortage of drivers is becoming a serious issue, mainly in regional areas, amid heavy
reliance on automobiles as a means of transportation.
Mobility is an important pillar of Society 5.0. Japan needs to make revisions to the systemof paid passenger transportation in a personal-use vehicle from a user perspective that makethe current system easier to utilize.
Collaboration with taxi businesses offers a way of reducing the burden on local public
entities and it is also beneficial for users, through provision of a safe and reliable service.
The government hence aims to develop a legal framework that lets taxi businesses receive
consignments and simplifies procedures for participation in an implementing entity. Thistransportation envisions not only local residents, but also tourists in light of a future era of
40 million foreign visitors to Japan.
Additionally, revisions should enable ride sharing, including use of IT, in the taxi businessto provide less expensive fees for users.
For drones, the government plans to take steps that expand usage beyond line of sight.
(1) Current situation
All generations rely heavily on automobiles as a means of transportation in regional areas.
Automobile reliance is over 50% for the 80 and older age group (Figure33). Furthermore, agrowing number of older workers and many seniors go outside for shopping and various tasks
at hospitals, public offices, and other locations.
There is also a worsening manpower shortage of the business drivers, and the effective jobopening ratio is twice the average for all occupations (Figure34. ). It is currently difficult tomaintain the transportation network from standpoint of recruiting taxi drivers. The number oftaxi drivers has been declining from a peak at 381,943 people in 2005 to 289,373 people in2016, or 24% less than the peak (Figure 35).
The government needs to promptly prepare traffic safety measures and arrange
transportation means that support movement in regional areas by seniors and others,
particularly in light of recent accidents involving senior drivers and traffic accidents harming

22

Provisional Translation
children.
The government must review ways to simplify provision of paid passenger transportationin personal-use vehicles (Figure 36) as a transportation means that supports regional
movement. Meanwhile, 80% of municipalities do not have a dedicated person for this area
(Figure 37) and handling vehicle assignment and safety management is a high hurdle formunicipalities.
Figure33. Auto reliance in regional areas (besides
the three major urban areas)

Figure34. Effective job openings ratio for vehicle drivers

80 and older
70-79

Automobile driving

60-69

Lehmanshock

50-59
Average of all
occupations

40-49
30-39

Ship and airplane piloting

20-29
Railway
driving

10-9
5-9Note: Does not include work with a contract period of less than four months or seasonal work. Total
average effective job openings ratio including these categories (2017) was 1.50x.
Train

Bus

Automobile

Motorcycle

Walking Other

Figure 35. Trends in the number of taxi drivers
10,000 people

289,373 people

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

（
年(Year)）Figure 36. Local mobility transportation methods
Types
Route buses

Buses

Community buses
Demand-based
buses
Taxis

Taxis

Ride-sharing taxis

Paid passenger
transportation service withprivate vehicle
Mobility that does not
require approval orregistration under the Road
Transportation Act(assistance)

Characteristics
Street buses set routes, bus stops, and operating times and run at fixed times on fixed routes. Thispublic transportation service is vital to the lives of local residents for commuting to work and school,
going to see doctors, and other activities.
This bus service is mainly planned by municipalities to address demand that is not fully covered bystreet buses and runs at fixed times on fixed routes.
This bus service defines areas and dynamically operates on the shortest route to meet user requests andgoes to locations requested by users.
This is a public transportation service that provides door-to-door service that meets diverse mobility
needs for the daily lives of a wide range of users from children to seniors.
This is a ride-sharing transportation service provided by taxi businesses in collaboration with local
public entities to maintain daily-life transportation in local areas. It runs in a variety of formats that
range from fixed times and routes to on-demand service in order to meet regional needs.
This is a transportation service using private vehicles after taking necessary safety measures operated
by municipalities, NPO entities, and others. Measures to ensure safety and reliability include 1)
confirming safety (type-2 license or type-1 license + driving class, arrangement of a person in chargeof driving management, etc.) and 2) user protection (fee display).
This covers transportation as assistance that does not require approval or registration under the Road
Transportation Act to provide a means of transportation in regional areas (it only allows receipt of fees
to pay for gasoline, road usage fees, and parking area fees incurred by the driver in actual service andvoluntary tips).

23(Year)

Provisional Translation

Figure 37. Percentages of the number of people in charge of local public transportation by
populations
Total
700,000 people or more,
special area
(3％)
200,000 to 700,000 people（5％）
100,000 to 200,000
people（9％）
30,000 to 100,000 people(29％)
Less than 30,000 people
（55％）

80％

No oneOnepersonTwopeopleThreepeopleFourpeopleFive or more people

Additionally, implementation of ride sharing for taxis offers usage at a lower fee forcustomers and improves the productivity of taxi businesses. Tokyo conducted a real-world testof ride-sharing taxi service in 2018. As indicated in Figure 38, 70% of users responded thatthey want utilize it again.
Figure 38. Full-fledged deployment of ride-sharing taxis
Don’t know

Don’t want to use
Want to use again(2) Direction of government actions① Paid passenger transportation service with personal-use vehicles(Creation of a system for paid passenger transportation in personal-use vehicles jointlywith transportation businesses)
Collaboration in which municipalities consign operational management to transportation
businesses (taxi businesses, etc.) is a potential way to secure transportation services forregional life.
Local public entities benefit from diminished burden through utilization of transportation
business knowhow, and users gain access to safe and reliable transportation service.
To accomplish this, transportation businesses (taxi businesses, etc.) need to cooperate withpaid passenger transportation in personal-use vehicles utilizing their own knowhow.
Specifically, the government needs to prepare a legal framework for consignments totransportation businesses and participating by transportation businesses in implementing
entities. A system premised on participation by businesses is likely to simplify the consensusbuilding process in the local area. This approach should promote provision of safe and reliabletransportation service and lighten burden on implementing entities. The government intends

24

Provisional Translation
to submit the necessary bill to the National Diet’s 2020 Ordinary Session.
(Clarification of transportation scope to support tourism needs)
Recruitment of inbound activity is a key perspective that has become vital to regional
stimulation. Paid passenger transportation in personal-use vehicles must address tourism needs
too. To ensure support for tourists, similar to buses and taxis, the law must clarify scope as notjust local residents, but also visitors.
(Clarification of transportation blank zones)
At this point, multiple views exist about regions that should be covered by paid passenger
transportation in personal-use vehicles. The government hence needs to clarify its stance thatserves as the basis for review of system adoption by local public entities. It intends to survey
and analyze existing implementations, present an image, and formulate guidelines for thedecision framework in order to simplify local consensus formation in light of actual life
situations.
(Promotion of broad regional initiatives)
The government needs to simplify procedures for cases of adopting paid passenger
transportation in personal-use vehicles in regional public transportation network formationplans (prepared autonomously or jointly by prefectures and municipalities based on the Act on
Revitalization and Rehabilitation of Local Public Transportation Systems).
② Adoption of taxi ride-sharing service
Given the inefficiency of paying subsidies for operation of large buses in isolated regions,
it is necessary to optimize mobility service that fits actual transportation demand.
Additionally, in an era of IT advances, consideration should be given to digitaltransformation of the business model with passenger matching using an app, selection of ideal
routes that reflect real-time vehicle requests, and adoption of cashless payment service.
Implementation of ride sharing in taxis offers usage at a lower fee for customers andimproves the productivity of taxi businesses. Taxi ride- sharing service should be generally
adopted without restrictions on regions and conditions because it provides access to cheap
mobility to as many people as possible with limited transportation entities. The government
plans to prepare the environment with a Road Transportation Act notice and other adjustments1.
③ Realization of Mobility As A Service (MaaS)
Convenient services that support integrated arrangement of multiple modes of transportation,
reservations of destination lodgings and services, and other plans over a smartphone, utilize
cashless payment, and support smooth mobility without wasted waiting time (MaaS ：Mobility as a Service) are becoming a global trend. In Japan, MaaS offers a way of generating
latent demand from not only local residents, but also tourists and thereby contributing torevitalization of regional transportation.
The government aims to foster various good examples of this service, give assistance toinitiatives by business and local public entities in regional areas, and expand MaaS nationwide.

1

Provision of an ease-to-use environment with app-based matching, split charges based on distance traveled (on-demandroute selection; confirmed ahead of time), and cashless payment.

25

Provisional Translation(3) Drone flights beyond line of sight in populated areas① Current situation
While drones are permitted to conduct flights beyond the line of sight in unpopulated areas
and businesses providing cargo transportation services have registered, the government mustallow flights beyond the line of sight in populated areas in order to realize deliveries in regional
areas that are difficult to reach, assess agricultural crop growth conditions, inspect aging
infrastructure, and conduct wide-area patrol security for towns with advanced aging.
Potential applications of drones in populated areas include (a) delivery of daily life goods,
drugs, and other items to regions that are difficult to access through ground transport, (b) widearea confirmation from the air of crop development and pest and disease conditions on sparse
agricultural land, (c) wide-area inspections of bridges, buildings, and streets in towns that are
difficult to confirm just with people, and (d) wide-area patrols and security in towns withadvanced aging.
② Direction of government actions
The government plans to prepare a detailed roadmap, including a decision on fundamental
policy for system design during the current fiscal year, for realization of drone flights beyond
the line of sight in populated areas premised on safe flight routes (excluding zones with flightprohibitions) by fiscal 2022.

4. Corporate governance
Summary
The Abe administration has been promoting corporate governance reforms, and thesereforms have steadily delivered results, including selection of at least two independent
outside directors at 91% of TSE-1 listed firms. Global investors are reacting favorably tothe reforms.
Meanwhile, Japanese companies need to strengthen corporate governance further inadherence with the global standard in order to enhance their competitiveness and reliability.
Investors are critical of lack of action regarding governance of listed subsidiaries with
controlling parent companies, and this situation might undermine Japanese market trust.
In response, the government plans to formulate new guidelines that call on parent
companies to explain relationships and encourage subsidiaries to raise the percentage ofoutside directors who are independent of the controlling shareholder. It also intends toencourage revisions to the TSE standards and other rules.
(1) Current situation
Japan currently has 628 listed companies with controlling shareholders2 (listed subsidiaries),or 17.2% of all listed companies, and 311 of these companies are joint parent and subsidiarylisting, or 8.5% of all listed companies. The number of parent and subsidiary listings in Japanand percentage within the overall market are significantly higher than in the US and European
countries.
2

TSE’s current listing rules define a controlling shareholder as (1) holding more than 50% of voting rights or (2) holding
40% or more of voting right + dispatching a majority of directors or either having a contract that controls decisions onimportant financial and business policies or other arrangement that implies control of decisions on financial and business
policies.

26

Provisional Translation
The governance framework at listed subsidiaries should be independent of the controllingshareholder (parent company) and protect general shareholders and needs to be even morerobust than at normal listed companies in order to ensure autonomous decisions. Nevertheless,numbers of independent outside directors and auditors at listed subsidiaries are currently lower
than at normal listed companies (Figure 39).
Figure 39. Comparison of independent outside directors and auditors at listed subsidiaries
and general listed companies(People)(People)Number of independent outside directors

Listed subsidiaries*

General listed companies

Number of independent outside auditors

Listed subsidiaries*

General listed companies

Average number

Average number* Listed subsidiaries refer to parent-subsidiary listings(2)Direction of government actions
The government intends to formulate rules on governance at listed subsidiaries, requiring
parent companies to explain the significance of having listed subsidiaries in reorganization ofbusiness portfolios and clarifying an appropriate governance format to boost utilization atlisted subsidiaries.
① Practical guidelines
The government plans to newly formulate “practical guidelines on the group governancesystem” that present a listed-subsidiary governance format and encourage compliance bycompanies.
(Listed subsidiary action)
 Support a core role for independent outside directors in protection of general shareholders
and ensuring autonomous decisions
 Given the importance of independence from the controlling shareholder to ensure theefficacy of governance at the listed subsidiary, at least include not selecting a person with
ties to the controlling shareholder (person who worked at the controlling shareholder overthe past decade) in criteria for determining the autonomy of independent outside directors
 Aim to increase the percentage of independent outside directors on the board of the listed
subsidiary (at least one-third or a majority)
 In specific cases of transactions with conflicts of interest, investigate and review from thestandpoint of protecting the interests of general shareholders via a committee comprisedof only or a majority of independent outside directors (or independent outside auditors)
and built a board framework that respects investigation results
 Disclose information to investors, etc. on the type of governance framework built by thelisted subsidiary to ensure the interests of general shareholders(Parent company action) The parent company should provide a good reason for maintaining the subsidiary as alisted entity from the standpoint of maximizing group enterprise value. It should also27

Provisional Translation
exercise rights to select and remove directors of the listed subsidiary as the controllingshareholder in a manner that protects the efficacy of subsidiary governance and fulfill an
obligation to explain the suitability of actions to investors, etc. through disclosure of
information.
② TSE action
The Tokyo Stock Exchange should take additional measures to enhance the independenceof listed subsidiaries from the controlling shareholder, such as revising its autonomy standardsin accordance with the direction of the guidelines in order to raise the efficacy of “practicalguidelines on the group governance system.”

5. Smart public services(1) Building a new infrastructure for national life and economic policies utilizing the My
Number card
The government aims to build a cashless payment platform for joint use by administrative
services and private-sector services and enhance cloud services utilizing the individual
authentication function of My Number cards from the standpoint of expanding use of My
Number cards, while rigorously protecting personal information, as a national platform forSociety 5.0.
Specifically, public- and private-sectors utilize the My key platform and local government
point management cloud which store user ID through strict personal authentication. Making
full use of private-sector dynamism, enabling residents purchase Jichitai Point with cashless
payments. And government considers to exchanges Jichitai Point with private-sector points inthe future. This initiative will allow residents to use Jichitai Point to pay local mobility service,
shopping assistance, care support, and other services and facilitate policies that contribute tostimulation of local shopping districts.
Furthermore, the government will consider with related ministries and local governments
about providing various allowance, such as child allowance provided by the national and local
government, with points instead of cash. And it aims to achieve effective policy execution byenabling careful responses that truly address citizen needs, prevent fraudulent receipt, andlowering administrative costs through this initiative.
The government prepares to issue Jichitai Point using the My Number card for the
consumption leveling at the time of consumption tax hike. Furthermore, based on the above,it considers specific measures, such as formation of a task force consisting of public- andprivate-sector members, with the aim of establishing a platform as a national system with
future expandability and compatibility.
Additionally, the government is targeting full-fledged usage of My Number card as a healthinsurance card in March 2021 with the aim of boosting efficiency of medical insurance
administration and enhancing patient convenience through definite confirmation of personal
identity and insurance qualifications when giving treatment. It plans to provide sufficientassistance for promptly deployment of terminals and systems at medical entities with a goalof coverage at almost all medical entities to ensure the quickest and smoothest response
possible at medical entities nationwide. It also intends to formulate specific My Number cardacquisition promotion measures by insurance recipients for the respective insurance providers
and promote acquisition of My Number card by national and local government officials during
the current fiscal year.
From the point of view of realizing a digital society that is safe, reliable, and highly
convenient, The government envisions almost all residents having My Number cards during

28

Provisional Translation
fiscal 2022 and plans to strongly promote My Number cards by accelerating formulation of
My Number card facilitation plans at each local government, periodic follow-up and giving
necessary assistance. The government will promote of improvement of convenience andutilization of My Number card. And also it aims to utilize My Number to realize fair social
security and enhance administrative convenience and efficiency.
(Automation of individual and corporate procedures)
The service that can apply child care procedures including vaccinations and child allowancefrom pregnancy to starting schools with one button will start at some local governments fromnext fiscal year and aim for nationwide development from 2023. It will will begin one-time
acquisition of necessary documents and automated input and attachment to various reports for
year-end adjustment procedures of tax return via data linkage using Mynaportal from fiscal
2020.

(Installation of ICT infrastructure in schools)
The government intends to set goals and formulate a roadmap for the necessary ICT
environment at elementary schools, middle schools, and high schools.

6. Next-generation infrastructure(1) Improvement the sophistication and efficiency of infrastructure maintenance andmanagement work
The government intends to accelerate nationwide deployment of an ICT database that
improves the sophistication and efficiency of infrastructure maintenance and management
work handled by local public entities with centralized management of inspection andmaintenance repair data. It also aims to accelerate use of drones and other new technologies
in bridge inspections and other front-line sites. For a period of five years, it will provide
regional fiscal measures to support related initiatives by local public entities. Additionally, thegovernment is taking the lead in use of building information modeling (BIM) in construction
projects with orders placed by the national government and local public entities and aims topromote horizontal application to private-sector projects.
(2) Accelerated rollout of PPP and PFI formats
The Cabinet Office aims to prepare a specific action plan through fiscal 2022 during thecurrent fiscal year that focuses on medical and health, care, and repeat offense protection,
which are already fleshing out initiatives in Japan, as priority areas for proliferation of Pay
for Success. Related ministries and agencies will promote Pay for Success in three focus areas
based on the action plan. The government will also apply these results to other areas besides
the three priorities.
7. Aiming for realization of a decarbonized society(1) Formulation of a long-term strategy under the Paris Agreement and promotion of
SDGs and ESG investments
Change are advancing on a global scale. This should be called “a virtuous cycle ofenvironment and growth” in which companies challenging actively for environmental problem
raise capital from the world and in turn enable further growth and actions. Based on the “LongTerm strategy as a Growth Strategy Under the Paris Agreement (Cabinet Decision on June 11,2019),” the government intends to implement the following initiatives with proclaiming a29

Provisional Translation
decarbonized society as the ultimate goal and aiming to accomplish it ambitiously as early as
possible in second half of this century, while boldly taking measures towards the reduction of
GHGs emissions by 80% by 2050, and realizing a business-led virtuous cycle of environmentand growth in accordance that both global efforts and disruptive innovation will be essentioal.
Toward this end, the government intends to implement the following initiatives:① Formulate “Progressive Environment Innovation Strategy” in this year to set ambitious
goals and accelerate progressive innovations in energy and environmental areas
involving the public and private sector. In this strategy, set a target of reduction ofhydrogen production costs to one-tenth of the current level by 2050 and a detailed
roadmap indicating the steps to commercialize the artificial photosynthesis and other
CCU technologies that seeks effective utilization of CO2.
② Host RD20(Research and Development 20 for clean energy technologies) this autumn,
inviting the leaders of top research institutes from 20 countries to Japan, and lead global
cooperation towards progressive innovations through continuing this RD20 process next
year and thereafter.
③ Stimulate green finance by promoting disclosure and visualization, rather than
traditional regulations, to drive ESG funds that are increasing worldwide into
innovations. At the TCFD (Task Force on Climate-related Financial Disclosures)consortium launched in May 2019 as a venue for dialogue between companies andfinancial institutions, revise the world’s first TCFD (Task Force on Climate-related
Financial Disclosures) Guidance by government for companies released at the end oflast year and release guidance on green investments for financial institutions. Hold a
TCFD Summit in autumn 2019 that brings together leading companies and financial
institutions from around the world. Through these activities, promote integrating SDGs
into corporate management strategies and formulate a guide that compiles perspectives
and messages of leading companies in SDG business management and disseminate it inJapan and globally.
④ Promote proliferation of innovation results worldwide through development of businessenvironments and market creation. For this goal, work forward establishing public andprivate sector initiatives in ASEAN led by Japan.
(2) Large-scale deployment of renewable energy and realization of a carbon-free society
The government plans to put utmost efforts into maximum deployment of renewable energy
with the aim of making it the main power source. In this process, it intends to implement
electric power network reforms aimed at promoting lower costs and overcoming gridconstraints in order to limit burden placed on the general population and achieve maximum
deployment.
To accomplish this, the government promotes innovative technology development tosupport Japanese companies with technological superiority in the renewable energy field andaims to strengthen the electric power network to facilitate deployment of renewable energy,
including regional interconnection line reinforcement, and formation of a framework to secure
electric power investments, including preparation of necessary supply and adjustment
capacities, toward realization of a carbon-free society. It also intends to supplement adjustment
capacity that is a bottleneck for expansion of renewable energy by seeking higher performance30

Provisional Translationand lower costs for storage batteries, hydrogen, and other energy storage technologies and topromote wider use of advanced energy management that harnesses digital technology andconversion to a next-generation electric power network.
In nuclear power, Japan plans to resume operation of nuclear reactors, on the premise thatsafety comes before everything else , in cases where the Nuclear Regulatory Authority has
confirmed that the world’s toughest regulatory standards are met and with understand andcooperation of local public entities and related parties at the locations. The government also
intends to implement initiatives to maintain technology and human resources for further
enhancement of safety and response to smooth decommissioning activities.
The government aims to cultivate and stimulate the non-fossil value trading market createdin 2018, looking ahead to a future without FIT, and utilize these efforts to expand non-fossil
energy using a market mechanism. In ocean-based wind power, which is experiencing rapid
cost reduction in Europe, the government plans to apply sea area utilization rules that
contribute to wider deployments. It also aims to promote deployments of geothermal power
and other low-cost, stable power sources and biomass and other regionally unique renewableenergy sources jointly with local areas and revitalize local areas and strengthen resiliencethrough deployment of distributed regional energy systems, such as local output andconsumption of competitive renewable energy.

31

Provisional Translation
Chapter 3 Reforms to Social Security System for All Generations
Summary
Reforms to the social security system for all generations is one of the most important
policy challenges of the Abe Cabinet.
First, to increase the age for continued employment after retirement to over 65 years ofage, opportunities for employment up to the age of 70 will be secured and diverse options
will be made available based on seniors’ desires and qualifications.
The expanded hiring of mid-career and experienced personnel and review of the bulk
hiring of new graduates will be promoted. At the same time, companies will be asked toreview their own personnel evaluation and compensation systems. In addition, thegovernment will request large companies to disclose information about their ratio of midcareer and experienced personnel hires.
Second, insurer incentives for disease prevention and nursing care prevention will beenhanced. Until now, public insurance has mainly covered the costs of treating people whohave fallen ill and the costs of nursing care services for seniors in need. However, the roleof disease prevention and nursing care prevention is growing as we have entered the era of
the 100-year life. Prevention is important for many reasons, including extending healthy
life expectancy, improving quality of life, and promoting the active role of seniors.
Therefore, in addition to the efforts of individuals, it is important for insurers such as
local governments and health insurance associations to work on prevention. Specifically,for disease prevention, this will include fundamental improvements and more varied
allocations under insurer incentive programs of National Health Insurance (NHI). It will
also be important to utilize private-sector services in this process. Through this, efforts will
be made to increase the uptake rate of health checkups and to prevent lifestyle diseases
from increasing in severity. As for nursing care prevention, fundamental improvements
will be made to the nursing care incentive subsidy. Community gathering places for seniors
will be developed and the employment of seniors encouraged.
1. Securing employment opportunities up to the age of 70(1) Current situation
Japan’s population is expected to decline to around 100 million people by the year 2050.
However, the physical stamina and motor abilities of seniors have been rolled back by five
years of age during the course of the past 10 plus years (Figure 40). In addition, walking speed
has been rolled back by 10 years of age over the past decade (Figure 41). Therefore, analyzing
people’s health condition alone indicates there is still room to significantly increase theemployment rate of seniors compared to today.
Figure 40. Trends in Senior’s PhysicalStamina and Motor Abilities(Score)Figure 41. Changes in Normal Walking Speed of Seniors(Meters
per second)

Data for people 65 to 69 years ofRolled back 5 years of age

Women

FY2015

Normal walking speed

Total score ofphysical stamina test

FY2001Men

Data for people 70 to 74 years of
age

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

（
年
度
）

Rolled back 10 years of age
Rolled back 10 years of age(Years of
age)
1997

32

(Years of
age)
2006

Provisional Translation
Given such conditions, 80% of seniors who are age 60 and older desire to work until after
the age of 70. Meanwhile, the employment format desired by seniors shows that a little under
40% of men and 70% of women desire part-time work (Figure 42), indicating there are needsfor diverse working styles. Furthermore, for seniors 60 to 64 years of age, there is little
difference in terms of the indicators of employment rate and work inclination, but significant
differences are observed for seniors over 65 years of age (Figure 43).
Figure 42. Employment Format Desired of Seniors (60 to 64 years of age)
Full-time employee/staff

Part-time employee/staff (short working hours, etc.)
Self employed/Business owner/Freelance (including family employee)Work from home
No response

Agriculture, forestry or fishery (including family employee)

Women

Men

Other

Note: Contains responses to the question: “If you were to work at a paying job after the age of 60, what type of employment format would you desire?”

Figure 43. Employment Rate and Work Inclinations after the Age of 60
60 to 64 years old

65 to 69 years old

70 and older

Employment rate

Employment rate

Employment rate

Want a paying job(Want to continue)

Want a paying job(Want to continue)

Want a paying job(Want to continue)(2) Direction of government action① Securing employment opportunities up to the age of 70(Diverse options)
In ushering in the era of the 100-year life, it is necessary to develop places for seniors witha desire to work to play an active role so that they can fully contribute their skills.
To secure hiring and employment opportunities for seniors, the possible options for seniors
to play an active role based on their own characteristics need to be expanded, unlike thesituation up to the age of 65, while securing employment opportunities up to the age of 70.
Therefore, to secure employment opportunities from 65 to 70 years of age, diverse options
will be set out in legislation and consideration will be given to a framework where companies
determine which options to offer based on discussions between labor and management.
Consideration will also be given to a framework where companies will consult with individuals
about which option to use and then make this option available.
The options for legislation include the following:(a) Eliminate mandatory retirement age(b) Extend mandatory retirement age to 70(c) Introduce continuous employment system (including continuous employment at a
subsidiary or affiliate, similar to the current system up to the age of 65)(d) Re-employment at another company other than a subsidiary or affiliate(e) Provide funding for freelance contracts with individuals(f) Support start-ups by individuals; and33

Provisional Translation(g) Provide funding for participation in social contribution activities by individuals
Companies will determine which of the options (a) to (g) to adopt based on discussions
between labor and management. In detailed reviews of each option, careful consideration will
be given to the extent of company responsibilities in these options and the detailed approaches
to company involvement.
(Stage 1 Legislation)
Legislation will be developed in two stages to smoothly move ahead with securing
employment opportunities up to the age of 70, with stage one legislation developed first.
In stage one legislation, options such as (a) to (g) above will be specified and provisions
will require efforts to secure employment opportunities up to age 70. In addition, when deemednecessary, the Minister of Health, Labour and Welfare will require labor and management of
individual companies to formulate a plan and to ensure that the company follows through on
the formulation of this plan.
(Stage 2 Legislation)
Based on progress of stage one, in stage two amendments to laws will be considered tosecure compliance (requirement) by announcing names of individual companies not incompliance as with current laws. As with previous legislative precedents, consideration will
be given to establishing exclusion provisions in cases agreed upon by labor and management,such as a worker’s poor health or poor attendance record, etc.
(Submission Timing and points to consider)
To avoid confusion, amendments to current legislation up to the age of 65 (currently 63;
completion of enforcement in 2025) will not be considered.
Procedurally, after deliberations by the Labor Policy Council, the bill for stage one
legislation will be submitted to the ordinary session of the Diet in 2020.
(Relationship with pension system)
The pensionable age, which is currently 65 years of age, will not be raised, as a result of
securing employment opportunities up to age 70. Meanwhile, the timing for when a person
can start to draw old-age pension benefits, which currently is between the ages of 60 and 70,
will be expanded after the age of 70. In addition, the old-age pension system for current
workers will be reviewed after discussions by the Social Security Council, leaving open thepossibility the system could be eliminated in the future, from the perspective of not inhibiting
people’s desire to work and with fairness in mind.
Through these efforts, all barriers to work will be removed and the transition will be madeto a framework that does not affect people’s desire to work.
(Development of various environments)
An environment will be developed in which seniors can contribute their skills and play anactive role safely. This will include support for building evaluation and compensation systems
focused on skills and results considering senior motivation and persuasion, initiatives topromote work mainly by local governments, promotion of career development support andrecurrent education, and securing the safety and health of seniors.
In addition, job assistance will be provided to women in middle to old age groups, which
will include strengthening the offerings of the Silver Human Resources Center, such as
expanding female membership.

34

Provisional Translation

2. Promotion of mid-career hiring and experienced personnel hiring(1) Current situation
Large companies that employ 5,000 or more workers have a high ratio of new graduate
hiring and hire employees in bulk in the spring. At the same time, their ratio of mid-career andexperienced personnel hiring is low (Figure 44).
Figure 44. Ratio of New Graduate / Mid-Career Hiring
No. ofcompanies
4,055

Ratio of new graduate hiring(2018 graduates)
34.7%

Ratio of mid-career hiring(FY2017)65.3%

5 to 299 employees

2,084

23.3%

76.7%

300 to 999 employees
1,000 to 4,999
employees
5,000 and more
employees

1,071

58.5%

41.5%

710

59.6%

40.4%

190

62.6%

37.4%

By sizeTotal(2) Direction of government action
Considering the era of the 100-year life, it is important to move ahead with hiring system
reforms so that workers with a desire to work can fully contribute their skills. In particular, anecessary review of the hiring system of large companies traditionally focused on the bulk
hiring of new graduates must beconducted , and at the same time, mid-career and experienced
personnel hiring must be expanded by adopting year-round hiring.
For this reason, companies must review their own hiring system as well as evaluation andcompensation systems. The government will respond in such ways as requiring large companies to disclose
information about their ratio of mid-career and experienced personnel hiring.

3. Prevention of disease and nursing care
(1) Current situation
More than half of all people in Japan cited “my own health” as something that “troubles andconcerns” them, and compared to the concern of “livelihood in old age”, the ratio of these
responses is rising in recent years.
Medical care expenditure for general practice totals 30.1853 trillion yen. More than onethird of this is related to lifestyle diseases (Figure 45), which includes diseases that can beprevented.
However, the percentage of preventive healthcare programs in public medical insurance(“Health Program Costs”) is 0.8%, or 0.1 trillion yen, for municipal programs for NHI (Figure46). Preventive healthcare programs in nursing care insurance (“Nursing Care
Prevention/Lifestyle Support Services Programs”) amount to 1.1% in total, or 0.1 trillion yen(Figure47).

35

Provisional Translation

Figure 45. Breakdown of Medical Care Expenditure for General Practice

Malignant neoplasm

Lifestyle disease

Other(Renal failure,transmittable disease, etc.)
Diabetes
Hypertensive disease

Lifestyle diseases accountfor one-third of the total(34.6%)

Heart disease

Gastrointestinal

Cerebrovascular disease
Organ system disease

Respiratory(Pneumonia, etc.)

Joint and skeletal(Joints, etc.)
Brokenbone

Mental illness

Neurological disease

Nervoussystem(Alzheim
er’s, etc.)

Opth
almol
ogic
3.6%

Diseases associated withmotor system or old age

Figure 46. Preventive Healthcare Programs in
Public Medical Care Insurance (Municipal NHI)

Figure 47. Preventive Healthcare Programs in
Nursing Care Insurance
Other

Health Program Costs

Nursing Care Prevention/LifestyleSupport sServices Program

Generaladministrative costs

Other

General administrative costs
Insurance benefits(Medical treatment costs, etc.)

Insurance benefits(Nursing care services, etc.)

Late-stage
medical support

Note: Settlement for FY2017

Note: Settlement for FY2016(Prevent Severity of diabetes and specific health guidance)
The annual medical costs of diabetes patients increase sharply as the disease becomes more
severe. Prevention of severity through early intervention is effective. In Kure City, Hiroshima
Prefecture, a local venture company carries out health guidance intervention for people withhigh risk of diabetes severity by estimating the health condition of NHI enrollees using medical
practitioners’ receipts for health insurance claims. As a result, the city was able to reduce thenumber of new dialysis patients by 60 percent over six years.
Viewed regionally, there are differences in the extent of municipal NHI initiatives
concerning prevention of diabetes severity (Figure 48).

36

Provisional Translation
In addition, while the implementation rate of specific health guidance 3 by insurers isincreasing, but it remains below the target level (Figure 49).
Figure 49. Implementation Rate of Specific Health
Guidance by Insurers

Figure 48. Ratio of Insurers Working to Prevent
Diabetes Severity

Municipal NHIFirst quartile Second quartile

Third quartile Fourth quartile

Highest ratio of
initiatives
Group ofprefectures

Kyokai Kenpo(healthinsurance
providedby the Japan
HealthInsurance
Association)

FY2017FY2016FY2015FY2014FY2013

FY2012FY2011FY2010Target for all insurers
set by the Ministry of Health,Labour and Welfare

Company health insurance
associations(Note) Municipal NHI is a form of public medical care insurance in whichpeople who do not belong to other insurance programs enroll,such as the self employed, agricultural, forestry and fisheries
workers, the unemployed, and retirees, etc.
Kyokai Kenpo is a form of public medical care insurance mainlyfor employees of small- and medium-sized enterprises (SMEs)
and their families.
Company health insurance associations are a form of public
medical care insurance mainly for employees of large companies
and their families.

Lowest ratio of
initiatives
Group ofprefectures(Note) Results for 1,716 municipalities.
The first quartile has the highest percentage of initiatives byprefecture (12 prefectures), followed by the second quartile (12prefectures), third quartile (12 prefectures), and fourth quartile (11prefectures). The top is 100%, while the bottom is 21.1%.

(Granting of healthcare points)
Only around half of all insurers grant what is known as ‘healthcare points’ (see note) toindividual enrollees to encourage changes in behavior. Horizontally rolling out best practices
for healthcare points bears significance.
(Note) The healthcare point program is a preventive healthcare program in which insurers grant points to enrollees
for health promotion activities, such as participation in health checkups, walking, exercise of health events.
These points can be exchanged for e-money or gift certificates for local products, etc.

(Dental checkups and cancer screening)
When left untreated, serious gum disease has been pointed out as a possible cause for the
onset of diabetes. The percentage of people receiving dental checkups is on the rise, but it
remains at only half.
Cancer screenings, too, have seen an increase in the uptake rate, but this rate remains ataround 40 to 50% only. The uptake rate for both dental checkups and cancer screenings must
be increased.
(Nursing care prevention）
In terms of nursing care prevention, survey results indicate that seniors who participated in salons(community gatherings) saw: ① their certification rate of nursing care needs cut in half and ② theirrisk of dementia lowered by 30% (Figure 50). Additionally, Mie Prefecture is implementing an

initiative where seniors are hired as nursing care helpers and placed in charge of peripheryservices on the front-lines of nursing care. Horizontally rolling out best practices bears
significance in terms of nursing care prevention.
3

A system where a public health nurse assists in improving the living habits of persons between the ages of 40 and 74
who received a specific health checkup and were determined to have a high risk of onset of lifestyle disease.

37

Provisional Translation

Salon participation and certification rate of nursing
care needs

Cut inhalf

No participation

Participation

Onset rate of dementia after salon participation(Changes in certification rate of nursing careneeds due to dementia)(Certification rate of nursing care needs)

Figure 50. Effects of Nursing Care and Dementia Prevention by Salon (Community Gathering Place)
Participation

Reduced by
30%

No participation

Participation(Note) Example of hiring of seniors as nursing care helpers in Mie Prefecture Mie Prefecture was the first in Japan to hire seniors as nursing care helpers with an eye toward nursing
care prevention.
 There are three levels of nursing care helper based on job difficulty and a framework is in place where
helpers can increase their level through experience, qualifications or on-the-job training.
 The effects from this hiring are: ① nursing care prevention by social participation of seniors; ②
reduction in overtime work of nursing care staff; ③ one nursing care helper increases the time of direct
nursing care provided by nursing care staff by 190 minutes per day on average; and ④ allows for oneon-one care for users with dementia.

(2) Direction of government action
Health is the foundation for people’s sense of security in the era of the 100-year life.
Reforms must be pursued with regard to medical care and nursing care to build a social security
system for all generations.
Prevention and health promotion are significant in many dimensions. This includes: ①
improving quality of life and alleviating future concerns by improving health; ② extending
healthy life expectancy and increasing people working in good health, and increasing thebearers of social security; and ③ seniors support important community infrastructure,
preventing the growing divide of health disparities. In addition, better living habits, early
prevention, and prevention of nursing care and dementia are expected to prove effective
toward alleviating medical care demand related to lifestyle disease and growing demand for
nursing care. As a result, in certain ways this can lead to the sustainability of the social security
system.
Prevention and health promotion must be promoted for all generations and community
members, including those indifferent to health. In addition to individual efforts, the role ofcompanies, insurers and local governments supporting individuals is also important. In recent
years, Japan has seen the diversification of work styles and changes in family composition due
to the increase in single member households. For this reason, the preventive healthcare
programs of insurers in the community and at work are particularly important. To promote
prevention and health promotion, the key will be whether bold incentive measures can beprovided to insurers engaging in such programs. The evaluation of the success or failure ofthese programs should be carried out using evidence-based evaluation.
Prevention and health promotion comprises two stages: ① primary prevention and health38

Provisional Translation
promotion that prevents disease and the need for nursing care; and ② secondary prevention
that involves early treatment after disease onset or preventing a disease from becoming more
severe. Initiatives will be promoted based on the characteristics and effects of each stage.
① Promotion of disease prevention
The role of community and company insurers in disease prevention is important. As such,
efforts will be made to increase preventive healthcare incentives for insurers.
(Support system for efforts by insurers [NHI])
The support system for efforts by insurers involves evaluations of the initiatives of insurers(prefectures and municipalities) towards prevention and health promotion and the granting ofsubsidies to insurers.
Increasing preventive healthcare incentives for insurers is needed for horizontally rollingout the progressive models of local governments. To boost consideration for disease
prevention in the public insurance system, fundamental improvements will be made to the
support system for efforts by insurers. At the same time, initiatives contributing to disease
prevention will be evaluated, and the variety of allocation standards will be increased using
such forms as (a) increasing the point allotment ratio for incentives granted to individuals andprevention of severity of lifestyle diseases and for boosting the uptake rate of dental checkups
and cancer screenings; and (b) increasing the point allotment ratio based on results of
prevention and health promotion to encourage introduction of excellent private-sector services.
(Late-stage senior support funds adjustment system [Company Health Insurance
Associations])
The late-stage senior support funds adjustment system involves evaluations of prevention
and health promotion initiatives of company health insurance associations for the late-stage
senior support funds borne and contributed by the medical care insurance of workers, such ascompany health insurance associations, to the late-stage senior medical care system, and theprovision of an addition (penalty) or subtraction (incentive) of contributions.
The range of adjustment in the late-stage senior support funds will be increased from 0.23%
in FY2017 to a maximum of 10% on both sides in FY2020, which will increase preventive
healthcare incentives for insurers (company health insurance associations).
② Promotion of nursing care prevention
Insurers (municipalities) and the prefecture of the municipality play an important role innursing care prevention, too. As such, preventive healthcare incentives will be increased for
insurers and prefectures.
(Nursing care incentive subsidy [subsidy for promoting increased functions of insurers])
The nursing care incentive subsidy involves evaluation of initiatives toward nursing careprevention of insurers or prefectures, and the granting of subsidies to insurers or prefectures.
Increasing incentives of insurers and prefectures is needed to horizontally roll out thenursing care prevention models of progressive local governments. As such, fundamental
improvements in the nursing care incentive subsidy will be made to increase consideration for
nursing care prevention in the public insurance system. At the same time, initiatives
contributing to nursing care prevention will be evaluated, and the variety of allocation
standards for grant issuance will be increased based on: (a) for nursing care prevention, using
private-sector services that make seniors more active mentally and physically through exercise,
expanding and enhancing community gathering places where seniors in the community can

39

Provisional Translation
gather and interact, and using points; and (b) for promotion of senior work and involvement,
granting points to volunteers and nursing care helpers, and the number of participants as seniornursing care helpers.
③ Promotion of evidence-based policy
When implementing the reforms in ① and ② above and promoting initiatives that
contribute to nursing care prevention, it will be important to reflect evidence-based evaluationsin initiatives. Therefore, verification programs will be implemented to confirm and build
evidence to confirm the effects of health improvement from prevention and health promotion
using data.
To ensure statistical accuracy, the government will establish a fundamental direction on
target fields and verification methods for verification programs, and, based on the results,
encourage insurers and others to implement appropriate preventive healthcare programs.
④ Promote Changes in individual behavior using nudge theory
To ensure the results of health checkups and notifications change individual behavior andincrease the uptake rate, knowledge theory will be used while enhancing information, such ascomparison with the entire population and averages and future predictions, in order to provide
to individuals health checkup data that is easy to comprehend.
⑤ Promotion of private-sector preventive healthcare services
During the process of promoting comprehensive social security reforms, excellent privatesector services that utilize data and wearable devices in preventive healthcare programs will
be employed. Positive reforms from three directions will be implemented that energize theeconomy and society at the same time. These three reforms are: (a) individual healthimprovement, (b) increase in bearers, and (c) development of growth industries.
(Promotion of health management and health investment by companies)
The health scorecard that visualizes preventive healthcare initiatives of company healthinsurance associations will be used to encourage cooperation between company healthinsurance associations and companies. The visualization of companies’ health investments
will make it possible for capital markets to appropriately evaluate a company’s health andproductivity management.

(Improve quality of healthcare services)
Guidelines will be prepared to improve the quality of healthcare services. In addition, efforts
will be made to promote standardization of healthcare data.

40

Provisional Translation
Chapter 4 Reinforcement of Regional Measures under Population Decline
1. Maintenance of Community Infrastructure and Competition Policy
Summary
Regional banks and bus service operators provide fundamental services to local
communities as ‘local infrastructure companies’, whose bankruptcies would likely haveserious impacts on the communities. Maintaining services of the companies is a national
priority.
Nevertheless, companies in these two fields are seeing a rapid downturn in business amid
the declining birthrate and declining population. Improving business for maintaining theinfrastructure function is an urgent issue and one option could be management integration
or joint management.
Therefore, special measures should be taken only for these local infrastructurecompanies in regard to management integration to maintain local communities. It is vitalthat the ultimate purpose of the Anti-Monopoly Act of protecting the “interests of general
consumers” be achieved by preventing adverse effects on consumers and users arising frommanagement integration and by using the fruits of management integration for maintaining
regional infrastructure and economic development. This will require the close
collaboration of the Japan Fair Trade Commission and the competent government agencies
so that the knowledge of both is fully employed.
First, bus services are an important mode of transport in local communities and these
services must be maintained for the seniors living there. There are many voices of concern
about the current state. As a typical example, if joint management of bus service operators
is permitted and if high frequency services in town centers rationalized, the revenue
increase from the rationalization can be utilized to maintain low demand routes. This will
result in greater convenience for local residents. A new scheme will be developed, and thescheme requires stakeholder councils set up in the community.
Second, regional banks underpin local economies by serving as the main bank to
between 70% and 80% of the companies in several particular regions. If their businessperformance weakens, the negative impacts, including reduced lending, could affectdepositors and borrowers as well as hinder smooth financial intermediation in thecommunities. In order to improve the operations of regional banks at an early stage of
declining profitability, special exceptions will be granted for management integration even
if the resulting market share is high, under the assumption that efforts will be made tomaintain services in regions based on capacity arising from the management integration.
For these purposes, a law on special measures will be established.
(1) Current situation① Bus services
There is a particularly strong concern in regions about cutbacks in public transportation
forcing people to rely on their own vehicles for daily transportation (Figure ). In addition, there
is a growing need to maintain bus services because more and more seniors have had to return
their driver’s licenses to authorities. In particular, in rural locations, the use of bus services
increases dramatically as users’ age increases (Figure ).
Yet, two-thirds of bus service operators (general passenger automobile carrier business) areunable to generate a profit. In particular, operators of bus services in regions outside of big
cities have seen a significant decline in revenue (Figure 53).

41

Provisional Translation

Figure 51. People’s Future Concerns About their Community (By Location)
Unable to live here because public transportation is cutback and I cannot drive
No place to enjoy hobbies or entertainment
Weak sense of community with no one to depend on
Barrier free (accessibility) designs have not been adopted for roads or
stations (many level differences)
Poor access to major cities
No facilities within walking distance, such as convenience stores,
supermarkets or hospitals
Susceptible to damages from natural disasters such as torrential rains orearthquakes
Few facilities to support childcare or nursing care
Other
Three major urban centers (n=1,236 people)

None in particular

Designated cities, prefectural capitals, core cities (n=1,236 people)
Municipalities with population of 50,000 or more (n=1,236 people)
Municipalities with population of less than 50,000 (n=1,236)*Multiple responses

Unconfirmed

Figure 52. Utilization of Railway/Bus Services as mode ofTransport in Rural Areas

（％）

Bus

Figure 53. Income Situation of Bus Service
Operators (FY2017)
Major cities

Other regions

51 operators

24 operators

Railway
Profitable: 75 operators
Not profitable: 170 operators

5-9
years
old

10-19
years
old

20-29
years
old

40-49
years
old

30-39
years
old

50-59
years
old

60-69
years
old

70-79
years
old

80
years
and

Major cities

Other regions

29 operators

141 operators② Regional banks
Regional banks underpin the local economy as the main bank for 70 to 80% of thecompanies, particularly in rural areas (Figure ). However, the net interest margin (difference
between interest paid and interest received) of regional banks (regional banks, second-tierregional banks, Saitama Resona Bank) continues to decline (Figure), resulting in weakfinancial position.
Figure 54: Role of Local Banks as Main Bank
(By region)

Financial institutions as main banks (nationwide)
Regional banks

Hokkaido
Other
TohokuCredit unions/credit
associations
Kanto
Regional banks
Hokuriku
Nationwide
1.43 million
companies
Chubu

Kinki

City banks

Second-tier regional
banks

Chugoku
Shikoku

Kyushu42

Second-tier regional banks

City banks

Credit unions/creditassociations

Other

Provisional Translation
On the other hand, banks have the advantage of economies of scale (scale merits) becauseof the vast fixed costs that arise from IT system expenses among other things. In other words,
even if the size of a bank’s loan book doubles, IT system costs do not necessarily double aswell (Figure 56). For this reason, there is ample room for cost cutting through management
integration, which is presumed to have a positive effect on bank sustainability.
Figure55． Declining Net Interest Margin of Local
Banks

Figure 56. Operating Expenses and Loan Balance of Local Banks

Operatingexpenses(100 million yen)

(FY)

Loan balance

Note: The figure covers regional banks, second-tier regional banks,and Saitama Resona Bank

(100 million yen)

Note: The figure covers regional banks, second-tier regional banks, and Saitama Resona Bank

(2) Direction of government actions① Bus services (and local public transportation competing with bus services)
As a typical example, in the center of towns, routes with excessive frequency are operated
by multiple bus service operators and local public transportation competing with these bus
service operators.
By allowing joint managements between these operators, the number of services on thesehigh frequency routes can be rationalized, while the revenue increase from the rationalization
can be used to maintain a network of bus services in low demand areas among other areas.
This will ensure convenience for all residents across a broad area and thereby secure theinterest of general consumers, which is the ultimate goal of competition policy.
For bus services, stakeholder councils have been set up under the Act on Revitalization andRehabilitation of Local Public Transportation Systems, and local public transportation
network formation plans are formulated and implemented by the councils. However, evenunder such councils, detailed discussions among operators about fares, pricing, operation
frequency and routes were viewed as a possible breach of the Anti-Monopoly Act and this has
been pointed out as an obstacle to plan formulation and implementation. Therefore, based on
the framework of such councils, there is a need to exempt joint managements involving theroutes, service intervals, and fares of bus service operators from the Anti-Monopoly Act anddevelop a clear framework for operators and communities. Specifically, there is a need to: (a)permit joint management of bus operators including utilization of fare pool to maintain a
network of bus services including services in low demand areas; (b) require maintaining a
network of bus services including services in low demand areas be a condition of approval of
joint management, and the approval of joint management be rescinded should this condition
be not maintained after the approval,; and (c) ensure the predictability of these rules forrelevant operators.
A requirement will be the establishment of a council based on the Act on Revitalization andRehabilitation of Local Public Transportation Systems for communities where it is possible to43

Provisional Translation
ensure core service provision as a network by carrying out coordinated initiatives among
operators.
Operators will determine the area to be served, the plan for maintaining and improving
convenience for the entire community, and the goal of services to be ensured. A framework
will be developed, which ensures convenience for local residents based on a variety ofsituations in the regions.
The areas covered in the plan will not only be areas where rationalization of services will
be undertaken among operators, but also areas in the entire network including unprofitable
routes in mountainous regions whose operation is secured as a result. The approvalrequirements of joint management would be, for example, that it is deemed difficult tocontinue service provision and maintain the entire network including the unprofitable routes
without joint management because of unprofitability.
②Regional banks
Regional banks play an important role in local communities. Their services need to be
maintained in an appropriate manner even in regions with a declining population.
If the downturn in business performance of regional banks persists, the negative effects,
such as reduced lending, will extend broadly to depositors and borrowers. Banks establish
relationships of trust with borrowers and use the relationships as a basis for determining credit
and supporting management of local companies. Therefore, there are concerns that, due to thepersistent downturn, banks will no longer be able to provide sufficient financial intermediation
functions.
A bank experiencing a downturn in business performance should make operational
improvements. For this reason, as a special measure, a management integration among
regional banks, even if the resulting market share is high, will be permitted in order to facilitate
their operational improvements at an early stage of downturn. But the application of themeasure will be limited to situations where the persistent downturn may affect smoothfinancial intermediation in the local community.
In other words:(a) Financial institutions pursuing management integration will submit an application to the
Financial Services Agency for exemption from the Anti-Monopoly Act pursuant to thelaw on special measures. When an application is submitted, the Financial Services
Agency will check whether the following requirements under the law on special
measures apply. Discussions will be held by the Japan Fair Trade Commission about theapplicability of these requirements (if no application is submitted, merger reviews will
be carried out pursuant to the Anti-Monopoly Act).
(b)Screenings will be carried out mainly by the Financial Services Agency for i) to iv) below
and by the Japan Fair Trade Commission for v). Only when each requirement is fulfilled
will an exemption be granted.
i) A local community is expected to see a continuous decline in demand for loans and feebased services for SMEs, and as a result, regional banks could find it difficult to provide
the abovementieoned services to the local community in a sustained manner into the
future.
ii) The applicant bank is, on a continuous basis, unable to cover expenses to sustain the
network of the abovementioned services from the revenue generated from the services.
iii) Management integration is acknowledged to considerably improve business andmaintain functions.
iv) Capacity arising as a result of iii) above is expected to be utilized in a way which
contribute to the local economy.

44

Provisional Translationv) Management integration will benefit the interests of users (general consumers) (even if
competition is reduced).
(c) If the requirements i) to iv) will be satisfied, the Financial Services Agency will consult
with the Japan Fair Trade Commission and the Financial Services Agency will respect
the opinion of the Japan Fair Trade Commission including applicability of requirementv).
(d) After approval, when conformity with the requirements of i) to v) is no longer
acknowledged, the Financial Services Agency will order the regional bank to takecorrective actions. In addition, the Japan Fair Trade Commission can require the
Financial Services Agency to take measures.
③ Limitation of scope of law on special measures
The scope of the law on special measures must be restricted to fields where management
integration or joint management is expected to offer the greatest effect toward improving
business by firms providing core services in the community and where competent government
agencies can monitor and supervise actions taken after management integration or joint
management. For the time being, the law will be limited to the above two fields. the law will
be in effect for a period of 10 years.
Additionally, the bill for the law on special measures will be submitted to the ordinary
session of the Diet in 2020.
④ Other
For the financial field, a separate review will be conducted simultaneously on other policy
means for regulatory reforms in order to promote the entry of new players, including thosefrom other industries, using new technologies, from the standpoint of user convenience andmaintaining and developing the local economy.
Reviews shall be conducted on approaches to financial administration of local financeacross prefectural borders, including the relationship with the Anti-Monopoly Act sometimein the future.
2. Supplying human resources to regions
To increase productivity across Japan, more flexible options must be available foroccupations nationwide both regionally and by industry.
In particular, in regions facing decline, securing professional and management resources toraise the level of company management locally bears great significance. Meanwhile, as wehave entered the era of the 100-year life, there will be a growing trend requiring places foroccupation changes or freelancing and side businesses and places for retirees to play an activerole post mandatory retirement. These two needs mutually complement one another andstrategically matching them represents one critical task for promoting the active role of humanresources and increasing productivity in the future.
Often, however, SMEs and micro businesses in regions have yet to clarify what type ofhuman resources they lack and what functions human resources should fulfill. This indicatesthat currently they cannot provide proper job offers and do not provide appropriatecompensation to talent they acquire.
As a result, the labor market in regions is immature. This is why employee placementbusinesses are reluctant to expand in regions and the inflow of human resources there is limited.
Considering the current situation, efforts will be focused and concentrated on the following:① reinforce functions for supporting local companies to clarify their management strategy andhuman resource requirements (promote involvement of local financial institutions, etc.); ②

45

Provisional Translation
fundamentally improve matching functions with human resources in major urban centers; and③ build a framework for promoting the supply of human resources from major urban centersto regions and immediately speed up the flow of professional and management humanresources from major urban centers to regions.

3. Revitalization of communities with rapidly declining populations
In regions with rapidly declining populations, the shortage of bearers of local industry, suchas agricultural, forestry and fisheries and commerce, has become serious, and, given thatdifficulties are arising in maintaining local communities and economies, human resources forcommunity development will be secured and their active roles promoted.

4. Promotion of Tourism-oriented Country
Tourism is the decisive factor towards achievement of regional revitalization and the pillarof the growth strategy. The Government will continue to promote efforts toward the realizationof a world-class tourism destination.

5. National Strategic Special Zones
From the standpoint of fostering a sound competition environment, legislation based on
the National Strategic Special Zone System will be quickly established that will promote
multiple unique regulatory reforms within regions based on the consensus of local residents
simultaneously and uniformly, aimed at the realization of the Super City concept that seeks
to achieve “whole future cities” that are pioneers in the use of AI and big data. Also, thetechnology groundwork for “Society 5.0” will be laid urgently.
Additionally, efforts will be made to create a ‘sandbox system’ exclusive to local
communities in order to speed up and facilitate demonstration testing on technologies of thenear future.

6. Increase productivity of SMEs and micro businesses
Promoting globalization of local economy will result in a positive cycle that increases the
productivity of SMEs and micro businesses, increases added value, supports the consumptionof employees and families, and contributes to the local economy. Such a positive cycle is vitalto growth of the whole of Japan.
① Support for implementing digitalization
To improve productivity through universal digitalization, we will continue to support using
Subsidy for Manufacturing and Service of SMEs and IT Introduction Subsidy, and consider
the expansion of the scope of subsidies which make use of digital tool such as cloud accounting
an additional factor for adoption and the spread of digital tools such as crowdfunding at thetime of establishment. In addition to the digitalization of individual companies, we willconsider to supporting the spread of data lending, bridge financing services using subsidy
approval as electronically recorded receivable, EDI services, and the promotion ofdigitalization using supporting institutions.
② Promotion of management resource succession

46

Provisional Translation
Existing business succession subsidies will be expanded and focused on second start-ups
and venture business succession, in order to promote new business growth on occasion ofbusiness succession. Efforts will also be made to back management resource succession-typestart-ups and third-party succession, including fundamentally expanding the businesssuccession support database and business successor bank.
③ Personal guarantee provided by business owners
Special provisions of “Guidelines for Personal Guarantee Provided by Business Owners”
that specify, in principle, guarantees cannot be sought from both the old and new businessowner, will be established before the end of the year, to ensure personal guarantees do not
become a hurdle that blocks business succession. In addition, a system will be put into place
where the confirmation and support of specialists can be received so that SMEs do not requirea personal guarantee as a condition. Furthermore, a new credit guarantee menu that does not
require personal guarantee of the successor at the time of business succession will be createdand policy promoted that reduces the cost burden of guarantees to as low as zero. In addition,
along with further promoting the efforts of government financial institutions and credit
guarantee corporations, such as the Shoko Chukin Bank becoming non-guaranteed in principle,
we will further promote loans that do not rely on personal guarantee provided by businessowners by private financial institutions through these measures.
④ Rationalization of close business relationships in each industry
Given that pressure from the main subcontracting entrepreneur to lower costs could be afactor behind why SMEs serving as subcontractors cannot increase the level of their wages
and capital investments, we will identify the issues of business relations according to eachindustry and work on fine improvement utilizing the competition law and the SME law system:
we will conduct a survey focusing on the actual situation of subcontractors by subcontract GMen especially in industries where the gap between parent and subcontractors is particularly
large, after analyzing the situation of profit, added value, distribution of labor and capital byindustry, sector and company size.
As a result, within the entire supply chain, large companies and SMEs to fairly share theburden of cost increases and large companies to support SMEs in digital technology
implementation, which in turn will build harmonious mutual prosperity that supports theincreased productivity of SMEs and increases the added value of the whole economy.

47

Provisional Translation<Works Cited>
Figure 1: Annual average growth rate of real labor productivity per hour (2001-07）
Figure 2: Annual average growth rate of real labor productivity per hour (2011-17)
Figure 3: Real labor productivity per hour in comparison to the United States (2017)
Figure 4: Trends in markup rates of companies in developed
Figure 5: Distribution of markup rates in US companies
Figure 6: Distribution of markup rates in companies in developed countries
Figure 7: Distribution of markup rates in Japanese companies
Figure 8: Change in worker share by occupation in the US (ages 16-64)
Figure 9: Change in worker share by occupation in the US (15 and older)
Figure 10: Increase in lifetime wages for graduates in the United States (per department)
Figure 11: Trends in people who want or have side jobs
Figure 12: Percentage of type of side job by industry
Figure 13: Influence on main business by side jobs
Figure 14: Impact of side job experience on main business wages
Figure 15: Breakdown of high-tech industry entrepreneurs in Sweden
Figure 16: Change in employment ratio due to Gig Economy (1995-2015)
Figure 17: Age distribution of “freelancers” in Japan
Figure 18: Comparison of the level of satisfaction between individual business owners, freelancers, and company employees
Figure 19: Number of newly listed companies by market
Figure 20: Number of venture company IPOs and M&A deals
Figure 21: Factor analysis of labor productivity (US)Figure 22: Factor analysis of labor productivity (Japan)
Figure 23: Corporate age distribution
Figure 24: Relationship between corporate age and profitability (ROA)
Figure 25: Operating income ratio by size and degree of diversification of Japanese and US companies (2000-2012 annual average)
Figure 26: Productivity (TFP) differences in US manufacturing
Figure 27: Comparison of management scores for Japanese and US companies
Figure 28: Open innovation implementation rate and partner comparison
Figure 29: Digital platform company benefits and problems
Figure 30: Current financial legal system
Figure 31: Transaction trends for fund transfer service providers
Figure 32: Financial transaction regulations
Figure 33: Auto reliance in regional areas (besides the three major urban areas)
Figure 34: Effective job openings ratio for vehicle drivers
Figure 35: Trends in the number of taxi drivers
Figure 36: Local mobility transportation methods
Figure 37: Percentages of the number of people in charge of local public transportation by populations
Figure 38: Full-fledged deployment of ride-sharing taxis
Figure 39: Comparison of independent outside directors and auditors at listed subsidiaries and general listed companies
Figure 40: From MEXT (2015).
Figure 41: Prepared based on "Report from the Working Group on Definition Review Concerning Seniors" by The Japan GerontologicalSociety and The Japan Geriatric Society.
Figure 42: Compiled based on "FY 2013 Awareness Survey on ‘Preparation’ for the Elderly Period" (2013) from the Cabinet Office. Men(n=287), women (n=242).
Figure 43: Prepared based on the “Labor Force Survey” (2017) by the Ministry of Internal Affairs and Communications and the “8thInternational Comparison Survey on Senior Living and Awareness” (2015) by the Cabinet Office. Survey targeting men and women
60 years and older (excluding those living in facilities) (n=1,105). The percentage for want a paying job (want to continue) is the total
for both men and women.
Figure 44: Prepared based on the “Survey on the Actual Situation of Mid-career Hiring” conducted in FY2017 by the Recruit Works Institute.
Targets were private-sector companies with 5 or more employees. Tabulation includes companies that carried out new graduate
hiring and mid-career hiring and companies that did not. The number of persons per company is the average calculated using thenumber of companies, including those that did not carry out hiring. In addition, shows the weighted back figure based on number of
employees.
Figure 45: Prepared based on the “FY2016 Outlook on National Medical Care Spending” by the Ministry of Health, Labour and Welfare.
Figure 46: Prepared based on the “FY2017 National Health Insurance Annual Report” by the Ministry of Health, Labour and Welfare.
Figure 47: Prepared based on the “FY2016 Nursing Care Insurance Program Report” by the Ministry of Health, Labour and Welfare. Nursing
Care Prevention/Lifestyle Support Services Program costs represent the total of “Nursing Care Prevention/Lifestyle Support Services
Program Costs” (people requiring assistance), “General Nursing Care Prevention Program Costs” (people who can go about their daily
life without hindrance), “Nursing Care Prevention Program Costs” (from previous system that existed up to FY2017 due to deferment
to new program), and “Health and Welfare Program Costs” Other includes “comprehensive support programs and voluntary programs”
of community support programs and “other”.
Figure 48: Prepared based on the “Census on Insurer Health Data” by Nippon Kenko Kaigi.
Figure 49: Prepared based on the “FY2017 Implementation Status of Specific Health Checkups and Specific Health Guidance” by the Ministryof Health, Labour and Welfare.
Figure 50: Left: Prepared based on “Establishing ‘community salons’ for seniors to interact has the potential to cut the certificate rate fornursing care needs in half. Press Release No: 056-15-01” by Hiroyuki Hikichi. Right: Prepared based on “Dementia risk reduced 30%
by participation in ‘relaxation salons’ -- 7-year follow-up survey--. Press Release No:095-16-25” by Hiroyuki Hikichi.
Figure 51: Prepared based on the "National Public Awareness Survey" by the Ministry of Land, Infrastructure, Transport and Tourism.
Figure 52: Prepared based on the "National Urban Transportation Characteristics Survey 2015" by City Bureau, Ministry of Land,
Infrastructure, Transport and Tourism. Percentage other than for railway and bus service include transport by private automobile orwalking, etc.

48

Provisional Translation
Figure 53: Prepared based on the "FY2017 Revenue Situation of the Bus Service Business" by the Ministry of Land, Infrastructure, Transport
and Tourism. General bus service operators with 30 or more buses in operation. Income does not include subsidies. In addition, does
not include side business income. Major cities includes Chiba, Buso (Tokyo San-Tama region, Saitama Prefecture and Kanagawa
Prefecture), Keihin (Tokyo’s special wards, Mitaka City, Musashino City, Chofu City, Komae City, Kawasaki City), Tokai (Aichi
Prefecture, Mie Prefecture, Gifu Prefecture), Keihanshin (Osaka Prefecture, Kyoto Prefecture [regions next to Osaka Prefecture
including Kyoto City]), and Hyogo Prefecture (regions next to Osaka Prefecture including Kobe City and Akashi City).
Figure 54: Financial institutions extracted and tabulated based on recognition as a main bank using company data recorded in COSMOS2, acorporate database researched and maintained independently by Teikoku Databank. In cases where a single company has more than
one main bank, the financial institution recognized as having the top share by the company is tabulated as the main bank.
Figure 55: “Summary Points from For Providing Better Financial Services in the Era of Transition” by the Financial Services Agency(published on September 26, 2018)
Figure 56: The report entitled “Issues facing Local Finance and Approaches to Competition”by the Review Committee for Improving
Financial Intermediation, Financial Services Agency (published on April 11, 2018)49