Establishing a Path for Growth ofthe Japanese Economy― Realizing Prosperous Living for the People ―January 20, 2014Keidanren

1. Preface

1The Japanese economy continues to recover steadily.
Now that Japan has found a bright outlook for the futureand is regaining "confidence in growth," Japanesecompanies have golden opportunities to take the initiativein creating new chances for growth and realizing affluent
national life.
Positioning the years until the 2020 Summer Olympics andParalympics in Tokyo as an intensive period to lay thefoundation of sustainable growth, both the public andprivate sectors should strive to realize the continuation ofrobust economic growth thereafter.
We therefore propose a set of measures to bring Japan to a
new stage of growth toward FY2030.

2. The "four goals" Japan should pursue

2(1) Sustainable growth of 3% in nominal terms and fiscalsoundness.
(2) "Positive cycle" in which expansion of corporate
earnings will lead to the improvement of employment
and household income.
(3) Truly global economy.
("Trade‐ and investment‐oriented Country" and "Tourism‐orientedCountry.")(4) Leadership with cutting‐edge science and technology.
("Scientific and technological innovation‐oriented Country.")

3. "Six engines": growth‐promoting reforms

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It is necessary to induce forward‐looking corporate
activities for the sake of realizing the “four goals” bysteadily implementing reforms summarized as thefollowing “six engines.”(1)Advancing globalization of the economy.
(2)Accelerating innovation.
(3)Discovering new domestic demand.
(4)Enhancing the quality of human resources.
(5)Establishing foundation of growth.
(6)Strengthening the competitiveness of Japan asbusiness hub.

3. “Six engines”

4(1) Advancing globalization of the economy
Specific examples
 Promotion of economic partnership pacts
─Trans‐Pacific Partnership(TPP), Japan‐China‐South Korea Free TradeAgreement, Regional Comprehensive Economic Partnership(RCEP), Japan‐EU Economic Partnership Agreement, Free Trade Area of the Asia‐Pacific(FTAAP), etc.

 Promotion of package‐style infrastructure exports
─ Promote marketing by top executives and utilization of private‐sector
human resources, etc.

 Promotion of Japan's contents and software businesses overseas
─ Promote international standardization strategies, support for promotionof Japan's contents overseas, etc.

 Urban redevelopment to create attractive cities and promotionof tourism
─ Rebuild transportation infrastructure, promote MICE (Meeting, Incentive
Travel, Convention/Conference and Exhibition) strategies, etc.

3. "Six engines"

5(2) Accelerating innovation
Specific examples
 Promotion of scientific and technological innovation
─ Achieve target for raising total government budget for R&D programs to1% of Japan's gross domestic product or 25 trillion yen, reinforce support
for R&D activities to put innovation into practical and commercial use, etc.

 Utilization of information and communication technology─ Use big data, open data, cloud computing, etc.
 Promotion of "Future City Model Projects" launched byKeidanren─ Demonstration experiments using selected technologies are under way infields such as environment and energy, medical care, transportation
infrastructure, and agriculture in 11 cities and regions across Japan since2011.
─ Pursue results that lead to solutions to social problems, regional
vitalization and changes in industrial systems.

3. "Six engines"

6(3) Discovering new domestic demandSpecific examples
 Development of compact cities and smart cities
─ Change the industrial structure by creating new demand while improving
productivity of regional industries by enhancing effects of gathering people,
goods and capital.

 Development of agriculture into competitive and growth industry
─ Expand and streamline large‐scale agriculture by consolidating farmland,
partnerships among agriculture, commerce and industry, develop
agriculture into so‐called "sixth industry," reinforce exports, etc.

 Sweeping deregulation and regulatory reform─ Speedily implement of business‐friendly "National Strategic Special Zones,""Special System for Corporate Field Tests" and "System to Eliminate
Regulatory Gray Zone Areas".

3. "Six engines"(4) Enhancing the quality of human resources
Specific examples
 Foster global‐minded human resources and those highly
competent in science and engineering.
─ Upgrade English education at elementary and secondary schools, guarantee
academic achievements required for students at time of completing highschool education, promote internationalization of universities, etc.

 Promotion of active roles played by women─ Companies support that from both qualitative and quantitative
standpoints.

 Widely acceptance of foreign human resources in areas ofexpertise and technology
─ Further upgrade "point system" to encourage acceptance of highly
competent foreign human resources, improve comprehensive acceptancesystem to promote long‐term stay of them, etc.

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3. "Six engines"

8(5) Establishing foundation of growth
Specific examples
 Securing of stable energy supply─ Draw up and implement road map to realize stable supply of electricity at
economical prices in next three to five years or so, accelerate process toward
resuming nuclear power plants operations based on safety‐first principle.
─Drastically review tax measures against global warming and feed‐in tariffsystem for renewable energy, etc.

 Reshaping of fiscal and social security systems
─ Ensure consumption tax hike to 10% in October 2015, prioritize andstreamline social security benefits, further reform government revenues andexpenditures to turn primary balance into surplus by FY2020, etc.

 Introduction of a regional government system called "Doshu‐sei,"etc.
─ Promote reform for decentralization of power to establish wider‐area local
administrative system at early date.
─ Adopt effective measures to address falling birthrate, promote electronicadministration, create diversified and flexible labor market, etc.

3. "Six engines"(6) Strengthening the competitiveness of Japan asbusiness hub
Specific examples

 Cut in effective corporate tax rate─ Secure path toward prompt cut in effective corporate tax rate to25%, comparable to rates in neighboring Asian nations.

 Infrastructure improvements aimed at enhancing
competitiveness and national resilience─ Improve core basic infrastructure such as roads, harbors andairports, and promote nationwide disaster management measures.
─ Actively use information and communication technology for
maintenance of existing infrastructure, utilize public‐ and private‐sector partnerships(PPP) and private finance initiatives(PFI) for
infrastructure investments, etc.

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4. Vision and Keidanren's resolve toward FY2030

10 By steadily implementing reforms summarized as the "six engines," it is highly possible
for Japan to achieve average economic growth of 3% and 2% in nominal and real terms,
respectively, between FY2014 and FY2030. The nation's nominal gross domestic product,
valued at about 480 trillion yen at present, will grow to around 850 trillion yen inFY2030.
 At the same time, Japan will be able to turn its primary balance into surplus in FY2020.
The ratio of long‐term government debt to GDP will also drop.
FY2015

FY2020

FY2030Avg.
(FY2014～FY2030)

Nominal GDP
growth rate
(Amount)

2.4％（¥514T）

3.3％（¥613T）

3.5％（¥847T）

3.3％

Real GDP
growth rate
(Amount)

0.8％（¥544T)

1.5％（¥582T）

2.3％（¥711T）

1.8％

Primary balance
to GDP ratio

▲3.2％

0.2％

5.2％

─Long‐term debt（% of GDP）

¥1,024T（200％）¥1,155T（188％）¥1,355T（160％）

─ Keidanren is resolved to realize these outlooks by doing its utmost to accelerateinnovation and create new growth opportunities in pursuit of more prosperous living forthe people.