Provisionaltranslation

Grand Design and Action Plan
for a New Form of Capitalism~Investing in People, Technology, and Startups~

June 7, 2022

Grand Design and Action Plan for a New Form of Capitalism(Table of contents)

Introduction ............................................... 1
I. A New Upgrade for Capitalism .............................. 1
1. The correction of market failure and defense of universal values ............................ 1
2. Finding solutions and new markets and growth, and achieving sustainable well-being forthe citizens, through “both the market and the state” approach ................................ 1
3. Economic security .......................................................................................................... 3

II. Approach to the Achievement of a New Form of Capitalism ....... 3
1. The elimination of barriers to distribution to achieve further growth ..................... 3
2. Securing power for growth through public-private collaboration driven bytechnological innovation ............................................................................................ 4
3. Achieving a society in which the private sector plays a public role........................... 4

III. Planned Priority Investment for a New Form of Capitalism ...... 5
1. Investment in and distribution to people ..................................................................... 5(1) Promoting wage increases .........................................................................................6(2) Facilitating labor mobility through skill increases .................................................8(3) Moving from savings to investment: formulation of the “Doubling Asset-based
Incomes Plan” ....................................................................................................11(4) Supporting the efforts of all generations, including children, working adults, andthe elderly ...........................................................................................................12(5) Respect for diversity and flexibility of selection ...................................................14(6) Formulating guidelines and strengthening disclosure to the stock market of nonfinancial information such as human capital..................................................16
2. Targeted investment in science, technology, and innovation ................................... 17(1) Quantum technology ...............................................................................................18(2) AI implementation ...................................................................................................19(3) Biomanufacturing ....................................................................................................20(4) Regenerative /cellular medicine and gene therapies ............................................20(5) Reform of university education ..............................................................................21(6) Expo 2025 Osaka, Kansai, Japan ...........................................................................21
3. Accelerating Establishment of Startups and Promoting Open Innovation ............ 22(1) Formulating the startup development five-year plan ..........................................22(2) Value-added creation and open innovation...........................................................27
4. Investment in GX (Green Transformation) and DX (Digital Transformation) ..... 29(1) Investment in GX .....................................................................................................29(2) Investment in DX .....................................................................................................34

Ⅳ． Building Economic and Social Systems for Solving Social Issues 36
1. Consider reforms of new and existing corporate forms that play public roles in theprivate sector ............................................................................................................ 36
2. Strengthening advocacy functions of competition regulators .................................. 37
3. Strengthening support for social entrepreneurs, including promoting donationculture and venture philanthropy .......................................................................... 37
4. Promoting impact investing ........................................................................................ 38
5. Support for NPOs and other organizations that solve social issues such as lonelinessand isolation .............................................................................................................. 38
6. Strengthening concessions (including PPP/PFI) ....................................................... 38

Ⅴ． Multi-polarization of the Economy and Society .............. 39
1. Promoting the Vision for a Digital Garden City Nation ........................................... 40(1) Infrastructure development for the realization of the Vision for a Digital Garden
City Nation .........................................................................................................40(2) Promoting agriculture, forestry, fisheries, tourism, and education to support the
Vision for a Digital Garden City Nation .........................................................42(3) Ensuring security as a precondition for Vision for a Digital Garden City Nation.............................................................................................................................43
2. From a unipolarly managed virtual space to a multipolar virtual space ............... 44(1) Establishing a new framework of trust for the Internet ......................................44(2) Improvements to promote Web 3.0, such as using NFTs (non-fungible tokens)based on blockchain technology .......................................................................44(3) Expanded use of content, including the metaverse ...............................................45(4) Promoting FinTech ..................................................................................................45
3．Promoting overseas business investments by Japanese companies ...................... 45

Ⅵ． Initiatives in Individual Fields ........................... 46
1. Responding to changes in the international environment ........................................ 46(1) Strengthening economic security ...........................................................................46(2) Promoting external economic partnerships ..........................................................47
2. Space .............................................................................................................................. 47
3. Oceans ........................................................................................................................... 48
4. Developing financial markets ...................................................................................... 48(1) Quarterly financial statements ...............................................................................48(2) Expanding Japan’s role as an international financial center and training asset
managers ............................................................................................................49(3) Scope of business of bank and firewall regulations to be reviewed ....................49(4) Promote investment instead of savings through efforts by financial institutions.............................................................................................................................49(5) A full-scale, bold shift to business loans based on business potentials................50
5. Global Health................................................................................................................ 50
6. Promotion of culture, the arts, and sports ................................................................. 50
7. Creation of new industries in Fukushima and other north-eastern regions .......... 51

Ⅶ． A Framework for the Realization of New Capitalism ......... 51
1. Formulation of process chart and following-up ........................................................ 51
2. Cooperation between public and private sectors ...................................................... 51
3. Economic and fiscal management framework .......................................................... 51

Introduction
This Grand Design and Action Plan for a New Form of Capitalism, which compiles andreviews the deliberations of the Council of New Form of Capitalism Realization and the rulingparty, shall be subject to approval by the Cabinet of Japan.

I. A New Upgrade for Capitalism
1. The correction of market failure and defense of universal values
The idea of Neoliberalism, that things would work if one left them up to the market andcompetition, arose from the 1980s to the 2000s, and the global economy grew significantly as
economic vitality returned with the spread of globalization. Neoliberalism can be said to haveplayed a role in driving that growth.
At the same time, countless hurdles have also emerged during that time, such as expanding
economic disparity, the worsening of climate change, increasing risk to economic security due
to excessive overseas dependence, growing urban problems due to population concentration,and market failure.
The Covid-19 Pandemic in particular has increased the risk management challenges facing
each country, such as clarifying that it is not possible to ensure the health of the citizens andthe economic security of the state under supply chains that depend on specific nations andregions.
Furthermore, the current Russian invasion of Ukraine has also revealed geopolitical risks to
the international economy and rising challenges from authoritarian states.
In fact, states that adopt what can be called authoritarian state capitalism have achieved
rapid economic growth, and expanded their influence in international politics, by ignoring therules of a free economy and engaging in unfair economic activities. Freedom and democracy
are facing challenges from this authoritarian state capitalism.
Meanwhile, the public and private sector is working together in each nation for the adoptionof digital technologies, the development of new cutting edge technologies, the rebuilding of
global supply chains, and large scale investment to rebuild the economy and social systems
following Covid-19.
We in Japan are also under pressure to change.
2. Finding solutions and new markets and growth, and achieving sustainable well-being forthe citizens, through “both the market and the state” approach
Capitalism has undergone two major transformations in the past. During the two world wars
1

of the 20th century, Laissez-faire was replaced with the concept of the welfare state in which
the government emphasized social welfare. Then, during the subsequent cold war geopoliticalstructure, the concept of neoliberalism arose to rebuild the economy that was losing
competitiveness. We now face the third major transition in the history of capitalism, and must
proceed with transformation to achieve a new form of capitalism, or in other words, the fourthstage of capitalism.
The only system that can surpass capitalism is capitalism itself. A new form of capitalism
is still, of course, capitalism.
However, whereas previous transitions have involved a fundamental swing of the pendulum
between market or country, and public or private, under the new capitalism, we must endeavor
to solve the emerging social problems that cannot be solved by the market alone, involving
considerable externalities, through an approach of “both the market and the state”, or in otherwords, through new public and private cooperation.
In doing so, we must perceive the challenges not as hurdles, but as sources of energy as wefind solutions to these social problems through new public and private cooperation, and to use
and include those sources of energy to achieve growth.
And this new form of capitalism must achieve sustainable well-being for all citizens. The
fruits that will come in the form of solutions to social problems through public and private
cooperation, and the new market creation and growth that will result thereof, must realize avirtuous cycle of growth and distribution, and must be fed back and shared widely to thecitizens, regions, and domains. In addition, through initiatives to tackle such social problems
as climate change and the declining birthrate and aging population, we must rebuild asustainable socioeconomic system that connects to the lives of the citizens and leaves no one
behind in order to take the lead in international society.
As described above, the basic ideas that lie at the heart of this new form of capitalism are:1) for solutions to be found by both the market and the state, and both the public and private
sectors; 2) to create new markets through the solving of social problems, or in other words, toachieve solutions to those problems along with economic growth; and 3) to improve the livesof the citizens and to achieve sustainable well-being for all through the finding of solutions toproblems.
In particular, in order to increase the sustainability and resilience of capitalism and ensurethat all people can benefit from growth, it is necessary for the public and private sectors tocollaborate on a large scale with a focus on areas that are difficult to tackle for the market
alone, such as the accumulation of human capital, the development of advanced technology,
and the development of startup companies. This collaboration is critically important for Japanconsidering that we are facing a coming shortage of labor due to the declining birthrate and2aging population.
As part of the collaboration, we must strengthen the foundations for contribution by womenacross the board, such as through promoting economic autonomy by correcting the wage gap
between men and women, in order to secure diversity for the economy and society of Japanand thereby lead to further innovation.
Further requirements we currently face are a transformation of working styles so that anyone
can work in the manner they desire anywhere, anytime, expanded support for child rearing,and the achievement of a social welfare system of mutual support based on the capabilities ofeach citizen as the declining birthrate and aging population begin to impact society, while thepursuit of a decentralized economic society based on the concepts of Web 3.0 and theblockchain are also important.
3. Economic security
National security is a fundamental requirement for the achievement of a new form ofcapitalism that will bring prosperity to the citizens. Given the constantly changing internationalsituation, the strengthening of economic security, including issues of energy and food, arepreconditions for a new form of capitalism.
Thus, under this new form of capitalism, we will work to secure not only diplomacy anddefense, but sustainable and inclusive safety and security in the daily lives of the citizens.
Finally, against the rise of authoritarian nations, it is necessary for nations that emphasize
such universal values as freedom, democracy, human rights, and the rule of law to join together
to maintain and strengthen a free and open economic order and promote free trade, whilestrengthening their response to unfair economic activities.

II. Approach to the Achievement of a New Form of Capitalism
1. The elimination of barriers to distribution to achieve further growth
Capitalism has brought economic growth through the engine of the market mechanism, andthe new form of capitalism must thoroughly pursue further growth. However, further growthcannot be realized if we do not appropriately distribute the fruits of growth so that it may beinvested in yet further growth. Distribution is not a cost, but investment in sustainable growth.
In Japan, there exist “clogging” such that the fruits of growth are not being appropriately
distributed to local areas and business partners and furthermore, are not being adequately
allocated for further research and development, capital investment, and employeecompensation. These “cloggings” are inhibiting further growth. The trickle-down

3phenomenon will not occur if we simply wait for it to happen. Instead, it is necessary toeliminate these “cloggings” through active policy involvement.
The formation of an ample middle class is important for the healthy development of
democracy, and the enrichment of the middle class, which will also play the central role in theeconomic society of the new form of capitalism, will help avoid the expansion and ossificationof economic disparity and achieve a sustainable economic society. For this purpose, we mustensure the distribution of both flows, in terms of wage increases and optimizing business withSMEs, and stock, in terms of education and asset formation, while promoting sustainabledistribution through support for digital investment to prepare for the coming era of labor
shortages.
2. Securing power for growth through public-private collaboration driven bytechnological innovation
Each country is making bold investments in innovation to rebuild their economies and social
systems in the post-Covid society because innovations in such domains as digital technology,
including AI and quantum technologies, clean energy, material technology, biotechnology,
and medical field, contain potential solutions for countless problems facing society, while also
serving as the source of competitiveness in a new age.
However, research and development investment and capital investment in Japan lags far
behind that of other countries.
It is essential for Japan to also boldly promote innovation through public and private
collaboration to upgrade our nation’s economy and social systems, and boldly shift fromcompetitiveness based on cost cutting to that based on the creation of new value.
Furthermore, in this age of digital transformation (DX) and green transformation (GX),
where ideas are being put into practical use at a high speed and new technologies are rapidly
being updated, the importance of intangible things against tangible things, of intangible assets
against tangible assets, is growing as the source of competitiveness, rather than the traditionalsource of machinery and equipment. In such times, creative innovation and economic growth
emerge from the maximization of human capabilities. Therefore, it is essential to realize asociety in which all people, including women, youth, and the elderly, can each exercise theirknowledge and experience, and to continuously work to improve their skills through generous
investment in people.
3. Achieving a society in which the private sector plays a public role
It is difficult for many of social problems to be solved with the government solely in thelead. In order to encourage society as a whole to engage in solving its problems, we must aim

4to become a society in which the private sector can take the lead in tackling the problems weface. For that, we must rethink market rules and laws to reward contributions to solve those
problems, and by doing so, create a flow by which funds and people gather at companies
according to the size of their contributions. Furthermore, in addition to existing companies, it
is essential to diversify actors engaged in solving social problems to include startups, social
entrepreneurs, universities, and NPOs, in order to achieve a society in which the private sector
takes on a public role. There has been a particular rise in recent years in individuals aiming toserve as social entrepreneurs to tackle the problems of society, such as problems of theenvironment or child rearing. Accordingly, we intend to provide full support to the initiativesof these social entrepreneurs as a new form of public-private partnership.
From this perspective, we must consider “impact” in addition to “risk” and “return” in order
to include “problem solving” as an additional indicator for evaluation under capitalism.
In doing so, one of the keys to that problem solving is the use of digital technology. It is
important to enable the use of digital technology to solve problems by upgrading regulations
and systems to match the digital age, and to promote competition policy to ensure faircompetition commensurate with the new age in order to enable the private sector to maximize
its capabilities.

III. Planned Priority Investment for a New Form of Capitalism
In order to rebuild the economy and put it on a new growth trajectory through theachievement of a new form of capitalism, we will flexibly carry out the essential fiscal stimulus
and tax reform from a medium to long-term perspective. For this purpose, we will focus on
investment in four pillars: investment in people, investment in science, technology, andinnovation, investment in startups, and investment in GX and DX.
1. Investment in and distribution to people
As with the shift from things to ideas, people are becoming increasingly important toexercise creativity in the midst of major waves of change such as DX and GX, making
investment in people essential. Furthermore, increasing value by investing in people isbecoming extremely important in the face of labor shortages for Japan, a nation which has
tended to cut costs and increase productivity in the past through dependence on a cheap supplyof labor.
Furthermore, it is people who will solve the issues facing society, such as responding toclimate change, the declining birthrate and aging population, correcting income disparities,

5and securing economic security including energy and food, making investment in people themost important form of investment.
For that reason, we will thoroughly strengthen investment in people in terms of stock, suchas education and asset formation, in addition to investment in terms of flow, such as wages.
We will also strengthen efforts to prepare the environments necessary for each life stage,
including childhood, working age, and old age.
(1) Promoting wage increases
The labor share (or employer compensation divided by gross national income (GNI)) has
been trending downward in advanced nations.
Furthermore, an examination of household consumption and disposable income in advanced
nations shows that household consumption rises when disposable income rises. Therefore, theprimary reason for sluggish household consumption in Japan is because the increase indisposable income is also not adequate. 1
One major issue facing Japan is that the increase in wages is low despite the fact that therise in labor productivity per unit of time is not bad compared to other countries. 2 If wages do
not increase, consumption will not increase and the next stage of growth will not be achieved.
Therefore, we will work through public and private collaboration to ensure wages arecommensurate with the rise in labor productivity.
During the spring wage offensive this year, there was a shift in the level of wage 3 increases
that had been declining for several years, and it now shows signs of reaching a levelappropriate for the new form of capitalism. It is important for the public and private sector tocontinue to work together to cultivate an attitude in society to increase wages. The Council of
New Form of Capitalism Realization will work to reach a consensus on price shifting anddiverse working styles while considering the appropriate state of wage increases based on data
evidence.
Another major policy decision regarding investment in people is increasing the minimum
wage. Given the rise in the cost of living, it is necessary to work towards a raise in minimum
wage through public and private collaboration. Meanwhile, it is necessary for the Minimum
Wage Council, comprised of the Tripartite Structure, to properly discuss the issue withconsideration for living expenses, wages, and the ability to pay those wages.
1) Further utilization of the tax system for promoting wage increase

1 Basic Data P1: Comparison of Growth in Household Consumption and Disposable Income by Country
2 Basic Data P2: Comparison of Actual Wage Increases Per Person by Country
3 Basic Data P3: Changes from the Spring Labor Offensive6In order to create an environment that supports more aggressive wage increases in theprivate sector, the tax credit rate for the tax system for promoting wage increase was drasticallyincreased (from 20% to 30% for large companies and from 25% to 40% for SMEs).
Accordingly, we will work to promote further use of this tax system through thorough efforts
for public awareness, including briefings held throughout the country, promotion via
government institutions such as the Labor Standards Inspection Office, and briefings atorganizations for SMEs such as Chamber of Commerce and Industry and Commerce andIndustry Association.
Furthermore, in order to support wage increases by unprofitable SMEs, less likely effectedby the tax system, we created a special quota for raising subsidy amounts, via the Subsidy for
Monodzukuri (Subsidy Program for Monodzukuri, Commerce and Services) and Subsidy for
Sustainability (Subsidy Program for Sustaining Small Enterprises), for those companies thatraise wages despite being unprofitable. We also reviewed government procurement withregard to unprofitable companies, such as awarding more points to those that raised wages.
We will continue to promote further wage increases alongside these initiatives.
2) Government-wide optimization of small and medium-sized business subcontracting forpriority industries
Based on the "Package of Measures to Facilitate Pass-on for Value Creation throughPartnerships" (December 2021) and "Five Initiatives to Optimize Transactions" (February2022), we will promote the development of an environment that allows SMEs to appropriately
pass on labor costs, raw material costs, and energy costs in order to secure funding to increase
wages.
According to a survey, we found that the major factors interfering with such passing on
costs included the risks of changing or losing business partners due to demands for priceincreases, difficulty of accepting price increases due to price competition by the seller, and the
difficulty of price negotiations when the buyer is too powerful.
Based on these facts, we will carry out a survey on supply chain connections for roughly
100,000 companies in 22 industries regarding the abuse of dominant bargaining positions
under the Antimonopoly Act, divided into three categories of i) the manufacture and sale ofproducts for daily life, ii) manufacturing of parts and finished products, and iii) service
provision. We will use the survey results to lead to the development of a proper trading
environment, such as by conducting on-site investigations when necessary.
We will also prepare a guideline related to the abuse of dominant bargaining positions underthe Antimonopoly Act for the optimization of transactions throughout the supply chain,including problematic case studies.

7In order to strengthen the effectiveness of the Declaration of Partnership Building aiming
for coexistence and co-prosperity between large business and SMEs, we will survey companies
participating in the declaration and provide follow up on the execution thereof.
For this year’s priority inspection industries under the Act against Delay in Payment of
Subcontract Proceeds, etc. to Subcontractors, we have selected road freight forwarding, metal
products manufacturing, production machinery and equipment manufacturing, andtransportation machinery and equipment manufacturing. We will significantly increase thenumber of on-site inspections for these industries.
In addition, in the event that a high number of legal violations are recognized in industries
outside the list of priority inspection industries, we will order the relevant industry
organization to carry out a self inspection on the status of legal compliance via the ministrywith authority over that industry.
3) Further review of public price to improve compensation for long-term care and disability
welfare personnel and childcare workers.
We put in place measures to achieve a 3% raise in income for long-term care and disability
welfare personnel, childcare workers, and nurses involved in handling the Covid-19 Pandemic.
Regarding future directions for specific improvements in compensation for long-term careand disability welfare personnel and childcare workers, considerations will be made in light ofthe mid-term report of the Committee for the Evaluation and Examination of Public Prices
from the standpoint of raising compensation to a level appropriate to the work of each job inorder to secure the necessary personnel.
Regarding future compensation improvements for nurses, we will consider the state of wage
improvements according to career promotions for nurses at all workplaces in light of theoutcome of the above measures.
We will continue to work on compensation improvements based on the results of these
initiatives.
(2) Facilitating labor mobility through skill increases
1) An environment enabling people to choose jobs they want to do (support for retraining,
promotion of second jobs, and re-employment)
Investment in people from a stock perspective requires vocational training, retraining, lifelong education, etc.
In-demand occupations are being replaced by new job types in response to changes in the8era and the social environment. 4 In addition, data shows that, as the proportion of trained
employees increases, labor productivity per worker and average wages per head increase as aresult. 5
Therefore, in order to advance the smooth mobility of labor to growth areas, improve laborproductivity, and further increase wages, it is important to form public-private partnerships
not only within individual companies, but at a national scale, working to increase the skill
levels of workers and enrich human resources development systems. In doing so, weight will
be placed on working to improve the digital skills not only of digital human resources, but
raising the baseline skill level of the entire working generation.
In addition, to enable anyone an easy labor mobility between companies, it is also necessary
to build a structure which provides workers with career consulting for changing jobs oradvancing their careers.
Drawing on ideas solicited from employees, managers, training service providers, and thegeneral public, and based on a 400 billion yen package of measures over three years, support
will be provided - including to people in non-regular employment - in terms of capability
development, re-employment, and stepping up by transfer to another company. It is anticipatedthat approximately one million people will benefit from this program.
Investment in education and training will be further increased. Promoting the accumulationof human capital beyond the corporate framework at a national level will actively support
stepping up via labor transfer.
The program aims to make Off-JT training expenditure bottom out, and in addition, makepersonnel investment by Japanese companies 6 - which has been on a further declining trend inrecent years - at least double in the short term and then increase further.
2) Support for young researchers and encouraging research and development subsidy schemes
which tolerate early failure and look for long-term results
In an empirical study that compared the results of grant schemes that tolerate early failure,
allow for discretionary flexibility in research contents, and evaluate research over the longterm with typical, project-based grant schemes that evaluate research at regular intervals,
researchers in the former scheme, compared to the latter scheme, produced twice the numberof high-impact papers (number of citations ranking in the top 5%). 7 Therefore, research anddevelopment subsidy schemes which tolerate early failure and look for long-term results will
be encouraged. Specifically, application-type research and development support spanning
4 Basic data P4: Increase in employment through new occupations
5 Basic data P5: Impact of training
6 Basic data P6: International comparison of corporate personnel investment
7 Basic data P7 and P8: Comparison of results from research subsidy schemes which tolerate early failure and typical schemes

9multiple years such as moonshot research and development schemes and FOREST (Fusion
Oriented Research for disruptive Science and Technology) will be strengthened and reoriented toward tolerating early failure and evaluating over the longer term.
In addition, support for young researchers is important. It has been demonstrated that young
researchers chosen for the U.S. National Institutes of Health associate training program (which
selects young university graduates) are in later years highly likely to deliver major results suchas winning the Nobel Prize. 8 Likely benefits of these programs include reputation building aswell as interaction between people selected for them. Japan has some such initiatives, such as
the MITOU Program, but it is necessary to consider expansion to the national level. To that
end, consideration will be given to bringing together experienced researcher appraisers fromwithin Japan and abroad to conduct selection and provide research guidance.
3) Digital human resources development and building specialized capabilities
In order to increase wages, it is necessary for companies to increase value added. To that
end, it is necessary to promote personnel investment, particularly in the digital field.
Given the differing human resources required by large companies, small- to medium-sizedcompanies, and IT companies, it is necessary to build up the digital human resources who will
implement digital solutions and take the lead in addressing issues faced by communities.
Building on the current one million people, a structure will be gradually established which cantrain 250,000 people annually by the end of this fiscal year and 450,000 people annually by
the end of the 2024 fiscal year, ensuring a total of 3.3 million people by the 2026 fiscal year.
To that end, an online platform will be built, recruiting participation from universities,
educational institutions, and companies involved in digital human resources development,
providing training content required of all digital human resources, and running practical casestudy training programs based on corporate examples.
At the same time, education in AI, data science, and math will be strengthened at universities
etc. nationwide (including provincial universities), developing human resources who can apply
such knowledge regardless of whether their background is in the humanities or the sciences.
In addition, an environment will be created in which digital human resources are bothtrained in the regions as well as encouraged to return to and enabled to remain in regional areas.
In terms of cybersecurity human resources development - which is increasingly important
as digital implementation advances - in addition to the above initiatives, cybersecurity humanresources will be developed at companies, government agencies etc. as per section III. 4 (2)(9). In addition, from an economic security perspective, initiatives will be advanced as per

8 Basic data P9: Effects of implementing selection programs at early stage

10

section VI. 1 (1) to strengthen defenses against more advanced and complex attacks.
4) Expanding side jobs and multiple jobs
The lifting of bans against side jobs and multiple jobs is taking some time, particularly atlarge companies with more than 1,000 employees. 9.Significant support has been voiced forside jobs, such as that businesses started through side jobs fail at a lower rate, 10 people whohave side jobs become unemployed at a lower rate, 11and companies which have accepted sidejobs have resolved their human resources shortage. 12 Side jobs and multiple jobs will befurther promoted in order to advance the smooth mobility of labor to growth areas andindustries.
Thus, from the perspective of broadening workers’ choices of occupation and supporting
diverse career building, the “Guidelines for Promotion of Side Jobs and Multiple Jobs” will berevised to encourage companies to disclose information about whether or not they permit sidejobs and multiple jobs, and what any conditions are when imposed.
(3) Moving from savings to investment: formulation of the “Doubling Asset-based
Incomes Plan”
Among the 2,000 trillion yen of personal financial assets in Japan, over half is held in bankdeposits or cash. As a result, over the last 20 years the value of household financial assets in
the U.S. has tripled and in the U.K. has increased by 2.3 times, but in Japan the increase was
1.4 times.
In order for households to become financially more comfortable, it is necessary to create avirtuous cycle by redirecting some household deposits into investments so that households canreceive the benefits of sustained increases in corporate value.
To that end, a significant expansion of NISA (tax exemption program for small investment)is planned to encourage shifting of personal financial assets from savings to investment acrossall generations. In addition, taking into account that the obligation to make efforts to secure
work opportunities is being extended to age 70, it will aim at the elderly who hold the majorityof cash and deposits, a reform of iDeCo (Individual-type Defined Contribution pension plan)
and also - create an environment that facilitates asset formation for their children’s generation.
A forum for consideration of these initiatives will be established within the Council of New
Form of Capitalism Realization, and will formulate the comprehensive “Doubling Asset-based
Incomes Plan” by the end of this year.
9 Basic data P10: Side job systems by company size
10 Basic data P11: Decreased rate of business exit through gradually starting a business via a side job
11 Basic data P12: Effect of side jobs on career choice
12 Basic data P13: Effect of accepting side job and multiple job human resources11

We will provide information through methods such as workshops and seminars which
contribute to improve financial literacy for senior high school students and the general public.
The public pensions quick calculator which estimates how much a person could receive inthe future depending on changes in work styles was launched in April this year. Current
initiatives include linking with private-sector apps to enable visualization of the overall picture
including private pension and private-sector insurance.
(4) Supporting the efforts of all generations, including children, working adults, and theelderly
The following initiatives will be promoted while securing stable sources of funding.
1) Establishment of the Children and Families Agency
This initiative places policies regarding children at the center of Japan’s society, and- as acommand tower in order to advance the elimination of vertically divided administration, the
new Agency will appropriately engage with a range of issues from children’s perspective. To
be established in April next year, the Children and Families Agency will also work on
standardization of curricula and care across kindergartens, day care centers, and certified
centers for early childhood education.
2) Enhanced day care and after-school children’s clubs
Reducing the burden on parents and supporting child raising as an entire society throughsteadily implementing initiatives such as building the foundation for day care services basedon the “New Child-Rearing Relief Plan” etc. and providing after-school children’s clubs.
3) Full-scale introduction of career progress payment
We will establish a flexible repayment/payment (career progress payment) system that also
takes into account life events by reviewing the reduction system of monthly installment andfirstly introducing a new system that allows students to pay according to their income after
graduation without paying tuition fees while attending school to graduate school students. And
then, upon giving due consideration to the point of how parents, students themselves and thenational government bear education costs as well as to the possibility of gaining public
understanding and acceptance of this new system, we will conduct studies (note) toward fullscale introduction of the new system for students not eligible for the current tuition fee
exemptions, securing reliable financial resources.
(Note) Includes consideration of legal positioning.
At the same time, a public-private joint study support programs for female students pursuing

12further education in science, technology, and agriculture will be developed.
4) Support for housing costs of families with children
UR Rental Housing and Safety Net Housing will be utilized to reduce the housing costs
burden of families with children. At the same time, programs to obtain and renovate highly
energy-efficient housing will be promoted. The cost burden of moving house and renting will
be reduced for young people starting their new lives as married couples. In addition, initiatives
will be taken regarding support for marriage and childbirth.
5) Reducing the burden of in-home long-term care
As the number of elderly people increases in the future, it is projected that the number
requiring long-term care will increase significantly, but at the same time, the number of elderly
people living alone or as a couple will increase, meaning that families are less able to provide
long-term care. Working from the above preconditions, the foundation for long-term careservices will be steadily built based on projections of the future long-term care requirementsin each community.
6) Enhancing measures against dementia, enhancing pre-log-term preventive care, andpromotion of nursing care leave, etc.
Comprehensive measures regarding dementia will be promoted based on continued future
increases in the number of dementia sufferers. Discussions will be advanced regarding inhome care assistance for family members providing long-term care and people requiring longterm care - including dementia sufferers - utilizing familiar locations such as Community
General Support Centers, as well as adult guardianship, support for the protection of rights,
etc.
In addition, using ICT effectively, support for young carer will be delivered to thoroughly
ascertain their situation, and taking effective support measures based on evaluation of model
programs.
For elderly people confined to their homes, activities including the entire community will
be supported from the perspective of enhancing platforms for social participation activities
and pre-log-term preventive care, as well as building a service foundation including the entire
community such as strengthening the medical and long-term care liaison system.
Taking measures to prevent both men and women quitting their jobs to care for family,
including further raising awareness of the nursing care leave system.
Mental health measures will be promoted, bearing in mind the effects of the COVID-19
pandemic.

137) Promotion of health management
As well as companies and insurers working together to promote health management, thescoring methods etc. will be revised.
(5) Respect for diversity and flexibility of selection
Flexibility of selection will be ensured by creating an environment which respects diversity
and where people can work whatever their gender.
1) Respect for diversity
Large Japanese companies have tended to be managed principally by men in their middle
age and above, but looking ahead, greater diversity must be ensured within these organizations.
Japanese companies linking diversity to growth will be supported.
As well as thoroughly implementing and promoting a system of equal pay for equal work,
the business world will be pressed to expand implementation of diverse full-time employee
systems, such as short hours full-time employees, limited work site full-time employees, andoccupation/role limited full-time employees. In addition, initiatives aimed at reform ofcorporate organizations will also be promoted, including appointment of diverse humanresources such as women and younger people to executive roles etc., implementing asabbatical leave system, and secondment to startups.
2) Making disclosure of the gender wage gap mandatory
The gender wage gap across Japanese workers in both regular and irregular employment islarge compared to other developed economies. 13 In addition, the proportion of Japanesewomen working part time is high. 14
In accordance with the Act on the Promotion of Female Participation and Career
Advancement in the Workplace, disclosure of the wage gap between men and women will bemade mandatory as follows.
- Disclosure of information will be required for each standalone company, rather than on aconsolidated basis. Disclosure will also be required for companies owned by holding
companies.
- With regard to the wage gap between men and women, for all workers disclosure shall be
required not of the absolute amount but the ratio of female workers’ wages to maleworkers’ wages. In addition, disclosure will be required of this ratio separately for regular
13 Basic data P14: International comparison of the gender wage gap
14 Basic data P15: International comparison of proportion of women working part time14and irregular employees.
Note: Some companies are currently disclosing at their own discretion the ratio for female
workers at more detailed labor management classifications (for example, dividing
regular employment further by regular employees and limited work site employees).
In terms of disclosure items for the ratio of male to female workers’ wages,
additional disclosure at such classifications is of course possible.
- A comments field will be provided for companies which wish to add explanations whendisclosing the wage gap between men and women.
- Employers subject to disclosure requirements shall be those who normally employ 301
workers or more. Consideration will be given to companies with 101 to 300 workers
based on the situation after the disclosure requirements take effect.
- Disclosure of similar items to those required based on the Act on the Promotion of Female
Participation and Career Advancement in the Workplace will also be required in Annual
Securities Reports under the Financial Instruments and Exchange Act.
- The revisions to the system (Ministerial Order) will be enacted and take effect in summer
this year. As well as with other information for disclosure, the initial disclosure is to bemade with the financial results of the business year concluding after the revisions takeeffect in July this year.
3) Revisions etc. to systems which limit women's work
Moving forward, it is important to make the social security and taxation systems - which
impose limitations on women's work - neutral with regard to work styles.
Expanding the coverage of employee insurance is anticipated to have the benefit ofresolving the so-called “1.3 million yen barrier,” which forms a limitation on women working.
In addition, raising the minimum wage will also remove the so-called “1.06 million yen barrier.”
Practices which are not neutral with regard to diverse work styles are also evident in various
corporate allowances. Corporate spouse allowances which have a spousal income condition
also affect women’s work. Compelling change is not possible as they are conditions of
employment, but it is anticipated that labor and management will be aware of these effects andhold discussions toward revision, abolition, or downsizing such practices.
4) Realizing universal worker insurance
As work styles become more diverse, it is necessary to promote building a social security
system which is neutral with regard to work styles.
Firstly, expanded the coverage of employee insurance (employees’ pension insurance andhealth insurance) is being steadily implemented based on the Act on the Partial Revision of15

the National Pension Act, etc. to strengthen the country’s pension system, which includes
gradual reductions in company size requirements. In addition, revisions including abolition ofcompany size requirements and a review of industries where such insurance coverage is notavailable will be considered.
Consideration will be given to which to treat the status of freelance and gig workers as theemployee with regard to the coverage applicability of social insurance. Based on this step,
comprehensive consideration will be promoted regarding the shape of broader social insurance
coverage, bearing changes in the working environment uppermost in mind.
5) Promotion of work style reform including the work interval system, promoting parental
leave, and migration without job change
In addition to thoroughly implementing and promoting legal compliance about maximum
overtime limits, effort will be put into rectifying long working hours by broadly diffusing thework interval system.
With regard to men’s child-care leave, as well as promoting and evaluating the extra paternal
leave taking effect in fall this year, initiatives will be taken encouraging men to take child-careleave in order to close the gap between men and women in terms of the rate and number ofdays of leave taken.
“Migration without job change” will be promoted, which involves implementing digitaltechnology from the regions to support the establishment of regional satellite offices andmigration utilizing telework.
(6) Formulating guidelines and strengthening disclosure to the stock market of nonfinancial information such as human capital
Achieving visualization of non-financial information - including human capital as well as
strengthening mutual understanding with stockholders - is necessary in order to promote thetransition “from personnel expenses as a cost to personnel investment as an asset” andultimately create the virtuous cycle of growth and distribution which the New Form of
Capitalism aims for.
In the U.S. market, intangible assets (such as the quantity and quality of human capital andintellectual property assets, business models, and expectations of future competitiveness)account for the majority of corporate valuation. By contrast, the proportion of valuation intangible assets remains high in the Japanese market, so the visualization of non-financial
information such as human capital from companies to the stock market will be highly16significant. 15 Strengthening disclosure of non-financial information - such as by requiringlisting of policies on human resources development and internal environmental improvement
as well as indices and targets which express these - in Annual Securities Reports under the
Financial Instruments and Exchange Act will be progressed by the end of this year.
On the other hand, in a survey of CFOs of Japanese listed companies, many replied that“target setting and selection of related indices which should be monitored,” “making an
association with corporate value improvement,” and “preparing collection processes andsystems for necessary non-financial information” 16 are issues regarding disclosure ofsustainability-related information.
To that end, human capital visualization guidelines will be released this summer forcompanies to refer to in determining how specifically they should move forward withdisclosure, such as in terms of target setting and selection of related indices which should bemonitored as well as making an association with corporate value improvement.
In addition, consideration will be given to promoting visualization in the future to not only
the capital market but also the labor market regarding corporate initiatives concerning humancapital.
As disclosure is also important for non-financial information other than human capital,
companies will be encouraged to utilize the guidance for collaborative value creation etc.
2. Targeted investment in science, technology, and innovation
Just as vaccines have played the trump card against the COVID-19 pandemic, science,technology, and innovation have the power to address many social issues confronting theworld today, such as infectious diseases, climate change, and the declining birthrate and aging
population.
At the same time, challenges are emerging from authoritarian states, and the ultimate winner
will be decided by the power of science and technology. For example, having the capability todevelop and manufacture leading-edge semiconductors influences both international
competitiveness and, by extension, national security.
It is known that the social rate of return from research and development is higher than theprivate rate of return to the company which conducted the R&D thanks to positive externalities
to competitors. A study shows that a comparison of the increase in sales to a company(marginal private return) and the positive and negative externalities to other companies as awhole (marginal social return), brought about by the increase in research and development
15 Basic data P16: Proportion of intangible assets in total market capitalization
16 Basic data P17: Issues in disclosure of sustainability-related information17

costs of individual companies, revealed that there are positive externalities, and that the social
rate of return is estimated to be more than 2.5 times that of private rate of return. 17 Therefore,leaving research and development to only private companies tend to result in under-investment,
so it is important to pursue public-private R&D partnerships.
However, the rate of growth in research and development investment amounts is lower inJapan than other developed economies. 18 It is therefore necessary for the government to lay
out clear national strategies so both the public and private sectors can share future growth
expectations, and, through new public-private partnerships, R&D investment can become
more energetic and the social benefits of investment maximized.
To this end, incentives for applying private cash and deposits to research and development
investment will be strengthened. Specifically, consideration will be advanced about the shapeof the tax system to promote research and development investment by private-sector
companies in order to further accelerate open innovation and boost overall R&D investment.
In particular, quantum technology, AI, biotechnology, and medicine are fields of scienceand technology linked directly to Japan’s national interest. Therefore, in order for thegovernment to present national strategies and goals, national strategies will be formulated; thepublic and private sectors will work in partnership on a radical expansion of science andtechnology investment, leading to Japan’s renaissance as a scientific and technological nation.
To that end, incentives will be provided to companies increasing research and development
investment. At the same time, a science and technology advisor will be established at the Prime
Minister's official residence to provide information and advice to the Prime Minister.
(1) Quantum technology
Initiatives will be advanced systematically based on the “New Quantum Technology
Strategy.”
Quantum technology has high applicability in the computational field (computing andsimulation) as well as communications and encryption fields. Quantum computers are
anticipated to have applications across a wide range of fields, such as accelerating the searchfor candidate pharmaceuticals, improving chemical materials, and alleviating traffic
congestion.
By casting an eye towards fusion with other technological fields such as semiconductors
and Beyond 5G as well as research into fields where these can be applied, research anddevelopment into making quantum computers larger and higher in performance will beapproached from not a Japan-only perspective, but by promoting a global approach such as
17 Basic data P18: Size of externalities in research and development
18 Basic data P19: International comparison of total public and private research and development investment amounts

18

through creating partnerships with companies from leading like-minded countries. In order tosecure the capability for designing and manufacturing the next-generation semiconductors
which are essential for next-generation calculation platforms such as quantum computers, a
project will be promoted to build a design and manufacturing platform within the 2020s
through a U.S.-Japan public-private partnership.
In addition, the environment enabling verification of quantum technology will beestablished, with quantum computers and quantum-encrypted communications to be tested
across a wide range of fields, including energy, finance, pharmaceutical development andmedicine, materials chemistry, aviation, and mobility. Establishment of key hubs towardindustrialization will also be promoted.
One concern about current quantum-encrypted communications is a drop in security, as use
over long range (several tens of km or more) requires repeaters. Development will be promotedof quantum network technology, which enables communications remaining in the quantum
state.
(2) AI implementation
AI technology is moving into the social implementation stage, with development towardindustrialization becoming energetic. However, Japanese companies are implementing AI at alower rate than U.S. companies.
It is important to accumulate practical testing and trial and error based on AI technology.
Deep learning will be positioned as a priority field, with implementation and development
promoted bearing the specific needs of companies uppermost in mind. In doing so, fusion will
be promoted between AI and fields in which Japan has particular strengths, such as the physicalsciences, chemistry, and machinery, which - in addition to climate change, disaster prevention,etc. - will create highly-competitive products and services.
In addition, data held by universities and national government institutions is currently
dispersed among institutions as well as held in different formats. This initiative will enable
connection with other data platforms as well as promote usage and application of private-sector
companies etc.
In order to create an environment which enables usage of as much data as possible,
development of technology will be promoted which makes machine learning possible ofinformation which has been encrypted for privacy reasons.
Large investments have been made into AI technology on a global scale, and its
development continues apace. National research institutions will proactively provide technicalinformation to promote implementation of AI through private-sector applications. In addition,
research team structures will be revised to enrich R&D into AI at national research institutions

19

etc.
(3) Biomanufacturing
Biomanufacturing involves using genetic technology to increase the volume of target
substances that microorganisms produce, or make them create new substances. This field of
research has the potential to achieve both economic growth as well as addressing global-scalesocial issues such as marine pollution or the shortage of food or resources.
Investments measured in the trillions of yen are ongoing in the U.S. and China, withinternational investment competition intensifying. Bold and focused investment will be madein this field. Investments will include promoting joint research and development withmicroorganism design platform companies as well as companies from different fields ofendeavor with a view as far as large-scale manufacturing and social implementation. Initiatives
will also cover human resources development, base creation, and development support for coretechnology such as genome synthesis and editing technology as well as microorganism
fermentative production technology which manufacturers of miso, soy sauce, and alcoholic
beverages around Japan have strengths in.
(4) Regenerative /cellular medicine and gene therapies
1) Regenerative and /cellular medicine and gene therapies
Initiatives in terms of regenerative /cellular medicine and gene therapies will include
promoting clinical research and trials of new medical technologies, R&D oriented towardcommercializing these medical technologies, strengthening the manufacturing platform forcells and vectors (media by which introduce genes to cells) utilized in treatments, and humanresources development, leading to practical application of effective technologies. By breaking
down the barriers existing between regenerative /cellular medicine and gene therapies, theestablishment of integrated R&D and clinical research hubs will be promoted, in which
genome editing technology in the field of gene therapy will be applied to regenerative /cellular
medicine.
In addition to genome editing technology, revolutionary R&D will be pursued including
next-generation iPS cells with high differentiation efficiency or low immunological rejection,organoids (miniature internal organs that are created artificially in vitro) which can examine
drug efficacy etc. tailored to individual characteristics, as well as R&D of exosomes that are
secreted from cells, aiming at application to diagnosis and treatment of disease.
2) Promoting genome medicine
In order to promote pharmaceutical development for cancer and intractable diseases, an20

information platform will be built - and the environment concerning its usage and application
urgently developed - for the loading and sharing of clinical information and whole genome
analysis results.
In addition to analysis results aiming for the 100,000 genome scale, these results will also
include multiomics (comprehensive information about biomolecules) analysis results.
3) Development of therapeutic agents and vaccines
As the global pharmaceuticals market continues to grow, initiatives will be progressed sothat pharmaceutical development is a growth industry in Japan as well. Looking ahead,development of therapeutic agents and vaccines will be pursued, with a particular eye to futurerisks from infectious diseases.
(5) Reform of university education
In order to create globally-renowned research universities, a ten-trillion yen scale
universities fund will be supported for schools which not only build their research capabilities,
but also implement high-quality governance arrangements such as by separating research andmanagement as well as promoting young researchers. This system will prioritize funding toinitiatives which - led by people with advanced management capabilities, the core of university
reform - lead to stronger research capabilities.
Additionally, in order to strengthen public-private innovation human resources,
reorganization of university faculties and initiatives towards human resources development
which goes beyond the framework of the humanities or the sciences will be accelerated. To
that end, and bearing in mind the demands for human resources from industry and responding
to the needs of aspiring students, the reorganization of university faculties will be promoted
by boldly reviewing the regulations on universities as well as providing support for the initialinvestment required for reorganizing faculties and ongoing support for initial operational
expenses after reorganization.
In addition, to promote the advancement of women in STEM, support will be strengthened
for universities which actively work to ensure spaces for female students, and disclosure of
information about the enrollment and promotion situation of women will be encouraged.
Finally, education cutting across humanities and science will be promoted at the senior highschool level as well.
(6) Expo 2025 Osaka, Kansai, JapanThe Expo Osaka, Kansai, Japan to be held in 2025 will be a “People’s Living Lab” and acatalyst evoking hope for the future through new technology. As a showcase for new21

technologies, it will demonstrate how Japan’s leading-edge innovations contribute to society.
While revising the Action Plan sequentially, preparations including regulatory reform andcosts aspects will be advanced smoothly..
3. Accelerating Establishment of Startups and Promoting Open Innovation(1) Formulating the startup development five-year plan
New added value will be created by working to shift the emphasis from scale expansion tocreation of new businesses.
The economist Joseph Schumpeter expounded two seemingly-contradictory theories about
the sources of innovation. 19 His first theory (“Schumpeter Mark I”) is that the source ofinnovation lies in start-ups that are new entrants to the market. His second theory (“SchumpeterMark II”) is that the source of innovation lies in large companies that have a wealth of internal
capital as well as platforms that are capable of capturing value.
It is difficult to create innovation in a competitive market comprising only new companies,
and also difficult to create innovation in a market monopolized by large companies. Market
environments that are positioned right in between the two promote innovation. 20 This showsthat reality is a fusion of Mark I and Mark II. To promote innovation, both of the following
are important: (1) Promote the establishment of start-ups; (2) Create an environment forexisting large companies to engage in open innovation.
In addition, the higher a country’s average rate of firm creation and destruction (an index ofcreative destruction), the higher the per capita rate of economic growth. 21 In addition, young
businesses (startups) have a higher rate of contribution to added value creation. 22 By contrast,
the corporate entry and exit rates in Japan remain at a low level compared to the U.S. andmajor European countries. 23
Nurturing startups will encourage the dynamism and growth of the Japanese economy, andis the key to addressing social issues. Therefore, a forum for consideration will be establishedwithin the Council of New Form of Capitalism Realization, and, with functions as a “guiding
light” for implementation regarding the following items clarified, formulate by the end of thisyear the five-year plan with a view to increasing by 10 times in five years.
1) Usage of public procurement and radical expansion of SBIR system support for startups

19 Basic data P20: Schumpeter’s two theories about the source of innovation
20 Basic data P21: Schumpeter’s two theories and evaluation results
21 Basic data P22: Relationship between firm creation and destruction and per capita rate of economic growth
22 Basic data P23: Relationship between firm size and added value creation
23 Basic data P24 and P25: Trends in corporate entry and exit rates

22

The utilization of public procurement is important in nurturing startups. The support forcompanies which have been recently established (startups) provided through the Small
Business Innovation Research (SBIR) system will be radically expanded. To that end, thespecified subsidies based on the SBIR system will not only be expanded, but a funding stream
dedicated to startups or consortiums including startups which satisfy certain requirements willbe established.
At the same time, it is desirable that private-sector procurement also actively utilizes
startups in the future. Private-sector businesses will adhere to the “Guidelines on Business
Partnership Contracts with and Investment in Startups” and develop constructive relationships
with startups.
2) Expanding public capital investment in venture capital, including overseas venture capital
It has been empirically proven through comparisons of companies which have received
venture capital investment and those which have not that the former are more proactive about
innovation and creating employment. 24
In the U.S., the rate of corporate entry is decreasing but the amount of venture capital
investment is increasing, meaning that venture capital investment toward promising
entrepreneurs is growing.
Notably, while the amount of venture capital investment in the U.S. was 36 trillion yen in
2021, in Japan it was a mere 0.23 trillion yen. 25
Therefore, as well as significantly expanding funding provision through limited liability
investment to venture capital both in Japan and overseas, assistance taking a long-term
perspective in coordination with venture capital will also be expanded. Doing so will not only
nurture domestic venture capital but also attract investment from investors and venture capitaloverseas.
To ensure that a structure to carry out these initiatives is in place, the Japan Investment
Corporation’s operational period will be extended to 2050. Doing so will resolve the issue ofrestricted fund investment terms limiting investment in startups which need time to achieve
growth.
3) Redirecting personal financial assets and long-term investment funds such as GPIF toventure investment

24 Basic data P26: Venture capital investment and employment/innovation
25 Basic data P27: Comparison of venture capital investment in Japan and the U.S.

23

In addition to redirecting the 2,000 trillion yen of personal financial assets in Japan toward
nurturing startups, pathways will be developed to redirect long-term investment funds such as
GPIF to venture investment and infrastructure provision.
4) Expanding support structures for young human resources with excellent ideas and skills
Selecting and supporting young human resources with excellent ideas and skills is beneficial
for nurturing startups. In Japan, the Information-technology Promotion Agency (IPA) runs the“MITOU Program” to discover and nurture such human resources in the IT field. To date, the
MITOU Program has succeeded in around 300 startups or commercializations. It has beenhighly rated, but has limited scope. Therefore, after building arrangements to provide businessadvice - support will be expanded to the national government level.
In addition, initiatives will begin to select and support young human resources withexcellent ideas and skills in fields other than IT as well (the National Institute of Advanced
Industrial Science and Technology, the New Energy and Industrial Technology Development
Organization, etc.)
As a result, the number of people selected will be expanded from around 70 to 500 per
annum over the next five years.
5) Global startup campuses to form startup clusters
The creation of startup campus clusters will be promoted, including attracting involvementfrom universities both from Japan and overseas.
6) Revision of the systems for receiving credit guarantees at business establishment such as
making management guarantees unnecessary
80% of people interested in starting a business cite personal guarantees as the key risk inthe event of business failure. 26 The state of personal guarantees when receiving credit
guarantees at business establishment will be revised, such as making management guarantees
unnecessary.
Therefore, measures will be taken to promote methods of startup financing in which
financial institutions do not require personal guarantees, such as establishing a new credit
guarantee system which does not demand management guarantees on business startup.
In addition, consideration will be made of the future direction of small- to medium-sizedbusiness financing, with measures toward the establishment of financing practices which do
not rely on management guarantees summarized within this fiscal year.

26 Basic data P28: Risks when starting a business and conditions for borrowing from financial institutions247) Implementing IPO process reform and consideration of SPAC
The amount of funding raised per IPO is 300 million dollars in the U.S. and 200 million
dollars in Europe, but only 60 million dollars in Japan. 27 In addition to the small comparative
amount of funding raised, the initial price (the stock price achieved on the first day of listing)in Japanese IPOs is significantly (+49%) higher than the opening price (the price at which theentrepreneur sells stocks at the time of listing). 28 This situation means that the amount offunding raised by entrepreneurs through IPOs is relatively small.
From the perspective of actively supporting the growth of startup companies in the future,
the IPO process has just been reviewed in April this year, based on which reform will be
implemented through the securities industry and the competition authorities.
With regard to SPAC (Special Purpose Acquisition Companies), consideration is being
promoted with regard to establishment of the necessary systems if SPACs were to be
implemented, paying particular attention to investor protection based on global standards.
8) Building the framework for stock options etc. to promote growth of startups which requiretime for commercialization
Consideration is being made of building the framework for stock options etc. to assist
startups (such as in deep tech) which require time for commercialization or startups aiming forsignificant growth over the long term including through global expansion.
9) Consideration of types of incorporation to build the environment for startups addressing
social issues
An increasing number of younger people thinking of establishing a startup do so with theaim of addressing social issues such as environmental problems or concerned with raisingchildren. From the perspective of supporting the startups of so-called social entrepreneurs,consideration is being given to creating a new form of incorporation for private-sector actors
taking on public-sector roles.
10) Establishing legislation to ensure the appropriateness of business dealings concerning
freelancers, a form of startup which does not hire employees

27 Basic data P29: International comparison of amount of funding raised per IPO
28 Basic data P30: International comparison of opening price compared to initial price in IPOs

25

The number of people working as freelancers - a form of startup engaging in work without
hiring employees - is also increasing in Japan, and has now reached 4.62 million people. 29
However, an increasing number of freelancers are experiencing difficulties such as delayed
payment of remuneration or unilateral changes in work content, 30 and in addition, tend to rely
heavily on specific clients (ordering parties). 31
Many freelancers are not covered by the Act against Delay in Payment of Subcontract
Proceeds, etc. to Subcontractors, which is a long-standing part of the SMEs legal framework.
As well as working to strengthen the consultation structure, consideration - aimed at urgent
submission to the Diet - is being given to the legal system to ensure the appropriateness ofbusiness dealings.
11) Creation of a secondary market for unlisted stocks
This initiative aims to create a framework in which startups are not forced into an IPO before
they are ready, and can remain unlisted to grow over time. To do so, it is important to enable
existing stockholders to easily trade in issued stocks (secondary trading).
In the U.S., there are several online matching platforms for professional investors enabling
the sale and purchase of unlisted stocks issued by private-sector businesses.
To that end, a framework will be developed so that professional investors can trade unlisted
stocks without using a stock exchange via a Proprietary Trading System (PTS) operated by asecurities company, which functions similarly to an exchange. This initiative will also broaden
the scope of investments available to professional investors.
12) Establishing entrepreneur development hubs overseas
Providing entrepreneurship education on the primary and secondary education stages by
establishing a hub in startup clusters such as Silicon Valley, taking in young human resources
aiming to start a business and offering guidance from local investors and entrepreneurs.
13) Entrepreneurship education
Promoting entrepreneurship education on the primary and secondary education stages byobtaining cooperation from industry and sending entrepreneurs to sites where training happens.
In addition, entrepreneur training will be rolled out horizontally by utilizing AI and deep techat universities and technical colleges.

29 Basic data P31: State of freelancing in Japan
30 Basic data P32: Details of trouble encountered by freelancers
31 Basic data P33: Degree of reliance by freelancers on specific clients for sales

2614) Strengthening intellectual property rights strategies at startups and universities
Working toward building a framework for startups to commercialize university intellectual
property rights, support will be strengthened for international patent applications byuniversities, joint patent rules will be revised, and restrictions on universities obtaining stocks
and share warrants abolished.
(2) Value-added creation and open innovation
Existing companies must be encouraged to shift from focusing on sales to creating new
added value.
It is difficult for blue-chip companies to maintain growth rates. However, a recent empiricalanalysis has revealed that even companies using older technologies can stay in business if theyalso adopt and use new technologies. 32
To encourage open innovation, where existing companies collaborate with startups, etc.,
they must withdraw from underperforming business fields and invest management resourcesin fields with growth potential and profitability, thereby promoting regeneration.
1) Establishment of voluntary liquidation legislation for business restructuring
Debt levels amongst Japanese corporations have increased by more than 70 trillion yen since
the COVID-19 pandemic. 33 In addition, amongst companies reporting excessive debt, 32.3%
of large companies and 34.5% of SMEs reported that debt was holding them back fromrestructuring their businesses. 34
Companies who responded that they might consider business rehabilitation if the pandemic
continued were asked about the essential factors when considering business revitalization.
Factors include ensuring these procedures would not affect their current business ortransactions (45.2%) and that the procedures would be brief (30.9%). 35
In European countries, unlike Japan, in addition to insolvency proceedings, Europe hassystems in which rights modifications (e.g., reduction of financial obligations) can be madeafter a majority vote for business restructuring, etc., without requiring the consent of all lenders.
However, court approval is required. 36
A new legal system for business restructuring should be studied and submitted to the Diet
as soon as possible to facilitate post-COVID-19 business restructuring.
For SMEs in particular, accompanying support will be provided by more than 30,000
32 Basic Data P34: Sustainability of Companies Using Old Technologies
33 Basic Data P35: Impacts of COVID-19 on Corporate Debt
34 Basic Data P36: Impact of Debt on Business Restructuring Efforts
35 Basic Data P37: Corporate Areas of Focus During Business Rehabilitation
36 Basic Data P38: Overview of Overseas Voluntary Liquidation and Business Rehabilitation Systems

27

authorized support organizations nationwide based on the Revitalization Package for Smalland Medium-Sized Enterprises. In addition, based on the Guidelines for Business
Revitalization, etc. of Small-and Medium-sized Enterprises, the government will promoterehabilitation in a manner that does not, in principle, require managing staff to resign.
2) Review of the taxation system and other rules and regulations to promote open innovation
amongst existing companies
Significantly few Japanese companies invest in startups compared to Europe and the UnitedStates. 37 Japan also has comparatively few mergers and acquisitions (M&A) with startups. 38
Investment and acquisition are important both as an exit strategy for startups and as a way
to promote open innovation amongst large pre-existing corporations. Therefore, to promote
open innovation, the government will re-examine areas such as taxation, taking into accounteffectiveness to date.
Additionally, to facilitate public stock offerings for M&A, the government will perform areview by next summer with a focus on also protecting investors. Essentially, when a listedcompany conducts a public stock offering for M&A purposes, the Japan Securities Dealers
Association's self-regulations require it to carry out the M&A within one year (in principle)
and to disclose alternate uses of proceeds if the M&A is not executed. However, commentators
have pointed out that these self-regulations have limited the scope of public stock offerings,
meaning they are only used for M&As.
3) Business management reforms (increased markup ratio, improved international
competitiveness)
Since labor productivity is based on the price a product/service is sold for minus costs,
productivity is low not only when costs are high but also when sales prices are low. From amarkup ratio perspective (which indicates the price a product is sold for compared to its
manufacturing cost); Japan is the lowest among the G7 countries. Therefore, Japanesecompanies will be encouraged to change their focus from selling at a lower price by cutting
costs to introducing new products and services with added value and selling them at areasonable price.
The government will work with companies in emerging countries to solve local social issues
by creating new products and services before reverse-importing them to Japan (reverse
innovation), thereby accelerating management reforms that improve Japanese companies'
markup rates and international competitiveness.
37 Basic Data P39: International Comparison of Investment in Startups by Companies
38 Basic Data P40: International Comparison of Mergers and Acquisitions of Startups

284) Creating corporate environments that enable long-term investment
The transformation to new capitalism will move away from corporate behavior that aims
for short-term profits through excessive price competitiveness. For this reason, the government
is aiming for Japanese companies to achieve long-term improvements in corporate value by
utilizing their 320 trillion yen of corporate cash equivalents to promote focused investment
and R&D in key areas. We will continue promoting corporate governance reforms andenhancing disclosure systems to facilitate investor communication.
5) Promoting open innovation with deep tech startups
For startups with technological capabilities but no proven results, government support iseffective for building these results and promoting open innovation with large corporations (e.g.,
NEDO). These efforts will be promoted amongst deep tech startups and others.
4. Investment in GX (Green Transformation) and DX (Digital Transformation)(1) Investment in GX
Climate change is the biggest challenge to be overcome by the realization of new capitalism.
The government will transform society and the economy to reduce greenhouse gas emissions
by 46% in fiscal 2030 and achieve net-zero greenhouse gas emissions by 2050.
The situation in Ukraine requires Japan to reduce its dependence on Russia for resourcesand energy through further diversification of supplies and to improve procurement abilities tosecure stable resources and energy.
The government will also accelerate decarbonization efforts, and energy self-sufficiency
will be increased based on the premise of securing a stable and affordable energy supply. To
achieve these goals, the government will promote thorough energy efficiency and maximize
renewable energy, nuclear power, and other power sources that contribute to energy security
and have substantial decarbonization effects. It will also work to introduce renewable energy
as much as possible while curbing the burden on the public and aiming for coexistence withlocal communities. These actions will be based on the concept of S+3E while ensuring that
renewable energy is, in principle, prioritized as a primary energy source. In addition, thegovernment is implementing measures based on the current electricity supply-demand strain
and the assumption that a similar situation may occur in the future. Efforts include swiftly
securing supply capacity and improving electricity networks and systems while also working
to maintain and strengthen supply chains to ensure stable use of decarbonized energy sources.
The quick realization of a significant transformation in economic and social structure
through decarbonization will also help strengthen Japan's international competitiveness.
29

While ensuring energy security, we will compile a roadmap for the next decade by the endof the year based on the Clean Energy Strategy Interim Report that outlines the path tosocioeconomic and industrial structural reforms for decarbonization via public-private
partnerships.
1) New policy initiatives
The government will invest 150 trillion yen over the next ten years towards green
transformation (GX) through public-private sector collaboration with the simultaneous aim of
meeting international commitments, strengthening Japan's industrial competitiveness, andachieving economic growth (some international organizations estimate that a threefold
increase over current investment levels will be required).
To realize these changes, the private sector must make ambitious and bold investments indecarbonization ahead of time based on a perspective that looks beyond the next decade. The
government will, therefore, produce a comprehensive 10-year roadmap for GX investment that
includes regulations, market design, government support, financial frameworks, andinfrastructure development. The roadmap will include five new policy initiatives that will
significantly increase predictability for corporate investment and allow for maximum
utilization of market trading among many players.
i) Establishment of GX Economic Transition Bonds (tentative name)To increase predictability for corporations, Japan's will to strongly encourage long-term
private investment must be presented in a tangible form to help prime private investment. This
will must then be used to achieve GX by all possible means. For this purpose, the government
plans to swiftly procure support funding for the promotion of GX over the next decade,clarifying its commitment to the private sector and the marketplace.
To realize investments of over 150 trillion yen over the next decade, we will embody andmake maximum use of the ""Pro-Growth Carbon Pricing" that has an effect on maximizing
both growth promotion and emissions reduction/absorption.
Under this concept, we will consider procuring prior government funds of sufficient size tolead public-private investment of more than 150 trillion yen through "GX Economic Transition
Bonds (tentative name)" backed by future financial resources and promptly providing longterm private investment support in decarbonization in a form foreseeable over multiple years,
together with new regulations and systems.
ii) Investment promotion measures that integrate regulations and support
The government's large-scale, medium-term, strategic fiscal mobilization will be combined30

with regulatory and institutional measures to maximize effectiveness. The government will
establish a new institutional framework that enhances business profitability and investment
predictability when utilizing regulatory methods such as strengthening energy efficiency
standards and expanding new energy and decarbonized power sources such as hydrogen andammonia.
iii) Step by step development and utilization of GX League
A trial implementation of the GX League will be implemented this fiscal year with support
from approximately 440 companies (covering over 40% of Japan's CO2 emissions). Moresignificant developments will be implemented in the future, including full-scale efforts topromote voluntary emissions trading and the development of a carbon credit market starting
next fiscal year.
(iv) Utilizing new financial instruments
Global ESG funds will be attracted by utilizing the government's large-scale, medium-term,
strategic fiscal stimulus as a starting point. Expansions to green finance will be combined withnew financial approaches, such as transition finance and innovation finance.
In addition to enhancing corporate disclosure, the credibility of ESG evaluation
organizations will be improved, and an infrastructure for data provision will be developed.
v) Strategies for international expansion, including the concept of Asia Zero Emissions
Community
Cooperation to promote decarbonization in Asian countries will be strengthened by realizing
the concept of Asia Zero Emissions Community. In addition, innovative cooperation in clean
energy will be promoted with developed countries such as the United States.
Toward materialization of i) through v) above, “GX Executive Council” will be newly set
up at the Prime Minister's Office this summer or later to discuss/consider and promptly reachconclusions.
2) Examples of specific actions(Hydrogen, ammonia)
With a view to the mass introduction of domestically produced hydrogen and ammonia,
support will be provided for the establishment of domestic and international supply chains toquickly narrow the fuel price gap with other fuels and develop supply bases.

31

(Renewable energy such as offshore wind power)
The government will work to introduce renewable energy as much as possible while curbing
the burden on the public and aiming for coexistence with local communities. These actions
will be based on the concept of S+3E while ensuring that renewable energy is, in principle,
prioritized as a primary energy source. Especially for offshore wind power, the government
will promote to form the projects, reduce the cost of floating structures, and implement
appropriate environmental impact assessments. It will also accelerate to invite new players todomestic market and meet international standards for establishing domestic supply chain.
(CCS)
To facilitate private sectors to commence CCS operations by 2030, a CCS roadmap thatclarifies CCS operators' legal responsibilities and support measures will be compiled by theend of this year. Consideration of a business framework including legislations will be
accelerated as well.
(Carbon recycling)
R&D aimed at cost reductions and the scaling up of manufacturing facilities will bepromoted to support technologies that enable the effective use of CO2, such as synthetic fuels,
sustainable aviation fuels (SAF), synthetic methane, concrete, and bio-manufacturing. In
addition, the development of rules related to CO2 emissions during the use of thesetechnologies will also be promoted.
(Automotive)
Considering potential future use of synthetic fuels in automobiles with an internal
combustion engine, with a view to achieving some goals such as 100% of new passenger
vehicle sales being for vehicles that are electrically driven (electric vehicles, fuel cell vehicles,
plug-in hybrid vehicles and hybrid vehicles) by 2035, support will be provided for such aspurchasing and infrastructure development, promotion of domestic manufacturing of batteries,
and positive transformations amongst small , medium, and micro-sized suppliers. Furthermore,to achieve carbon neutrality through production, utilization, and disposal in 2050, various
options will be pursued, such as technological developments. At the same time, all possible
measures will be taken to ensure that the automobile industry, a critical Japanese industry, willcontinue to maintain and strengthen its international competitiveness and lead the world.
(Houses and buildings)
By making compliance with energy efficiency standards mandatory for homes and buildings

32

by FY2025 and by supporting advanced energy efficiency investments, the government aims
to ensure the energy efficiency performance of houses and buildings newly constructed after
FY2030 to meet the level of the ZEH (Net Zero Energy House) and ZEB(Net Zero Energy
Building) standard.
(Semiconductors with leading power-saving performance)
To address increasing energy use by the computational infrastructure required for largescale data processing, support will be provided for advanced semiconductor development andhuman resources development based on collaboration with the U.S. Support will also be
provided to expand the production of semiconductors and manufacturing equipment andmaterials, which are vital for electrification efforts.
(Batteries)
To expand the manufacturing base for batteries and materials, support will be provided tostrengthen domestic capital investment, secure upstream resources, enable strategic overseas
expansion, develop next-generation batteries, and develop human resources, etc.
(Decarbonization of other industrial sectors)
To decarbonize industrial heat demand and manufacturing processes support will be
provided for SMEs in particular to receive detailed energy audits and capital investment toincrease the usage of currently available technologies and equipment, such as industrial heatpumps. Support will also be provided for the steel and chemical industries to encourage largescale capital investment in energy conversion, such as electrification and conversion to gas.
In addition to supporting innovative technologies that contribute to transforming industrial
structures, such as hydrogen reduction ironmaking and CO2 separation, capture, andutilization, consideration will be made regarding strengthening support measures, such as
investing additional financial resources to the Green Innovation Fund. These considerations
will be made to seamlessly continue support measures for the development of innovativetechnologies that contribute to the transformation of the energy demand and supply structure—includingnext-generation

solar

cells,

innovative

geothermal

power

generation,

advancednuclear reactors (advanced light water reactors, miniaturized reactors, hightemperature gas-cooled reactor, fast reactors)—and for the maintenance and strengthening of
human resource development and industrial infrastructure. Research and development offusion will be steadily promoted through international collaborations such as the ITER project
and the development of technologies in the private sector.

33

(Decarbonization amongst communities and in daily life)
Regional decarbonization will be accelerated through investment in decarbonizationtransitions by fostering human resource, financial support, and promoting changes in consumerawareness and behavior through point systems, SMEs-centric measures, forest carbon sinkmeasures, resource autonomy, the transition to a circular economy, heat illness prevention, etc.
(2) Investment in DX
Since DX is a source of new added value and is key to solving social issues, the Vision for
a Digital Garden City Nation will be promoted as described in V.1. Additionally, as describedin V.2, a decentralized digital society will be produced by providing the environment required
to transition from a unipolar, centrally-managed virtual space to a multipolar virtual space. In
addition to these actions, the following individual policies for DX investment will also be
promoted:
1) Research and development for the realization of post-5G and 6GAlongside promoting the development of post-5G systems, support will also be provided
for the so-called 6G, a next-generation communication infrastructure. To introduce these
improvements in around 2030, technologies will be established in around five years that willrealize transmission speeds 100 times faster than current standards. Ultra-low power
consumption of 1/100th that of current technologies will also be enabled. These improvements
will be achieved by utilizing optical communication technologies for everything fromnetworks to devices.
2) Develop digital market environments
Under The Act on Improving Transparency and Fairness of Digital Platforms (TFDPA),
digital platform operations by regulated businesses will be evaluated this fiscal year, andresults will be made public. In addition, the digital advertising market has been added to the
Act's scope.
The impacts caused by platform operators supplying smartphone operating systems and newcustomer contact points (voice assistants and wearables) on the competitive environment in
the digital market will continue to be evaluated to compile a final report.
3) Credit card interchange fee transparency
Interchange fees (credit card fees paid by the payment company contracted by the store to
the payment company contracted by the user) account for approximately 70% of credit card
merchants' fees. The Japan Fair Trade Commission has clarified which actions are desirable

34

in terms of competition policy and which are problematic under the Act on Prohibition ofPrivate Monopolization and Maintenance of Fair Trade. In light of this, credit card companies
will be asked to disclose their standard interchange fee rates to promote competition.
4) Promoting digital health
To help promote digital health initiatives, additional medical fees system for the use of
approved applications will be practiced. This initiative also supports implementing voluntary
certification systems for healthcare products and services.
5) Promoting the use of Individual Number Cards (My Number Card)
Individual Number Cards (My Number Card) will act as a passport for a digital society.
Increased convenience will be provided to users by enabling their use as a health insurance
card, integrating them with driver's licenses, and enabling smartphone-based functionality.
Usage will also be encouraged by creating public awareness of the cards' safety and security,
on the system, as proven by the acquisition of international standard security certifications.
6) DX for small and medium-sized enterprises
It is vital to strengthen competitiveness for small and medium-sized subcontractors throughproductivity improvements and optimizing trade. To promote DX amongst SMEs, tools will
be disseminated to diagnose management issues, expert support will be provided, and firms
will be assisted in introducing IT systems.
For larger companies, fundamental frameworks, such as the development of rules, will also
be developed.
7) Medical DX
The government and relevant industries will work together to establish a national medical
information platform, standardize electronic medical record information, and apply DX to therevision of medical service fees, and take legislative measures on the use of medical
information. Accordingly, we will establish a "Medical DX Promotion Headquarters” (nametentative) comprising relevant Cabinet ministers and headed by the prime minister.
8) Architectural and urban DX
The use of a variety of data will be promoted: three-dimensional data (building information
modeling or BIM) on building shape, material, and construction methods; 3D city models(PLATEAU) for urban spaces such as buildings and roads; unique identification numbers forland and buildings (real estate IDs).

359) Cyber security
Cyber-attacks have been targeting weak points in the supply chains of large and small andmedium-sized businesses to penetrate targets. To enhance cyber security throughout the supply
chain, the development of security personnel will be promoted in companies and government
agencies, etc. Subsidies will also be provided for the introduction of security systems by SMEs.
In addition, support will also be provided for cyber security countermeasures for IoT devices
manufactured by SMEs.
As cyber-attacks become more sophisticated and complex, the government will also takethe lead in strengthening the capacity to analyze cyber-attack countermeasures and systemvulnerabilities.

Ⅳ． Building Economic and Social Systems for Solving Social Issues
Producing these systems requires a shift from a perspective that focuses on the short-term
profitability of individual companies to one that emphasizes social value.
It is no longer viable to focus on short-term increases in corporate profits. Companies must
fulfill their social and environmental responsibilities (human capital and human rights, climatechange, diversity, etc.) to maintain businesses' sustainability. A multi-stakeholder corporate
society that considers social and environmental impacts in addition to financial risk/return will
be promoted.
Although Japan is known as a developed country that is nonetheless facing challenges, wewill also be the first in the world to view social issues as energy for growth and to incorporatemechanisms for solving them into our economy and society.
1. Consider reforms of new and existing corporate forms that play public roles in theprivate sector
As society becomes more complex, the private sector is expected to take the initiative inproviding detailed responses to diverse needs through services previously handled by thegovernment. Examples include medical care, long-term care, education, measures against
loneliness and isolation, environmental protection, etc. Against this backdrop, many Japanese
entrepreneurs also want to work on social issues while producing economic growth.
While producing shareholder profit is a central premise of traditional corporations, nonprofit organizations have limitations as business implementers and lack flexibility in fundprocurement, making it difficult for them to solve large-scale issues.

36New legal systems such as benefit corporations are now being developed in Europe and the
U.S. 39 In the United States, 7,704 of these corporations were established between 2010 and2017, spread widely across the country. 40 The overall amount invested in benefit corporations
has also increased six-fold over the past five years, and the amount invested per corporation
has increased four-fold. Investment is being seen not only by impact investors but also by
regular profit-seeking investors. 41
The government will consider the need for a new legal system as a new form of publicprivate partnership. A forum will be established to study this concept as part of the Council of
New Form of Capitalism Realization. Considerations will also be made regarding reforming
existing corporate forms, such as foundations and associations, from the perspective ofimproving convenience for the private sector.
2. Strengthening advocacy functions of competition regulators
In addition to enforcing the Act on Prohibition of Private Monopolization and Maintenanceof Fair Trade, competition regulators also investigate areas where competition is lacking due
to trade practices or regulations and advocate improvements in these practices or reviews ofregulations. There are strong expectations for the advocacy functions of the Japan Fair Trade
Commission (JTFC) as DX and other social changes progress.
In the past few years, the JTFC has conducted competition-related fact-finding surveys andadvocacy regarding cell phone rates, interbank transfer fees, initial public offerings by startups,
etc. 42 However, systems will be developed to fundamentally strengthen its advocacy functions.
3. Strengthening support for social entrepreneurs, including promoting donation culture
and venture philanthropy
In the United States, the concept of philanthropy, in which a wide range of people, including
successful entrepreneurs, provide returns to society through their business and contribute tosolving social issues, is well established.
The Japanese government will consider using dormant deposits for private-sector activities
that address social issues, including realizing SDGs. Discussions will be held regarding how
investments and loans should be made, with a conclusion to be reached by the end of this fiscal
year. In addition, the use of social finance to attract private donations, crowdfunding, and otherforms of funding and human resources will be promoted. The creation of the new corporate
forms (see above) and reforms of existing corporate forms, such as foundations and
39 Basic Data P41: New corporate forms for public-facing roles
40 Basic Data P42: Status of the establishment of benefit corporations
41 Basic Data P43: Investors in benefit corporations
42 Basic Data P44: The Fair Trade Commission’s Advocacy Functions

37

associations, will also be considered.
Considerations will also be made regarding strengthening systems for training social
entrepreneurs.
4. Promoting impact investing
The government will promote investment in social entrepreneurs along with impact
investment (investment aiming to generate social and environmental impacts alongside
financial returns) through public-private funds, etc.
It will also ensure that social bonds (bonds that limit the use of proceeds to social projects
to solving social issues) appropriately disclose the social benefits of the projects being
implemented. Guidelines will be developed, and examples of indicators will be provided foreach social issue to serve as a reference for issuing entities.
5. Support for NPOs and other organizations that solve social issues such as lonelinessand isolation
The ongoing COVID-19 pandemic has made life more difficult for households living inpoverty, and problems of loneliness and isolation have become a serious social issue.
Therefore, NPOs that serve as a bridge between people with difficulties and the government
are vital. For this reason, the government will provide detailed support for NPO activities andthose of other organizations working to combat loneliness and isolation.
The functions of public-private partnership platforms will also be strengthened to promote
matching between local governments and companies, NPOs, etc., to solve regional issues.
PR for the hometown tax for companies will be promoted to help dispatch corporate staff tolocal governments.
6. Strengthening concessions (including PPP/PFI)
Concessions for public facilities managed by private operators (public facility, etc. operating
project) will be strengthened.
The introduction of concessions (public facility, etc. operating project) will be promoted for
all airports in principle, including airports established and managed by local governments
while maximizing the value of airport management right.
Functional enhancements, such as increased capacity, remain necessary. For example, atHaneda Airport, coordination with the regions under the route should be steadily promoted tosecure expanded capacity for the new flight routes over the city center introduced in March
2020. Narita Airport will first need steady implementation of functional enhancement projects,
including constructing a third runway.

38

In addition to risk sharing based on the experience of the COVID-19 pandemic and otherfactors, the government will also study the implementation of concessions (public facility, etc.
operating projects) in the future. These considerations will take into account the progress offunctional enhancements at the airport and its relationship with the local community.
The introduction of concessions (public facility, etc. operating project) will also be
promoted for public transportation terminals “Busta”, which connect railroads, buses, and taxis.
The introduction of these businesses will also be promoted at stadiums, arenas, etc.
In the forestry sector, the establishment of Timber Harvesting Rights will be promoted forten pilot sites based on the Timber Harvesting Rights system. A specific policy on establishing
future Timber Harvesting Rights, including larger-scale and longer-term rights, will be
developed by the end of this year.
In addition, efforts will be strengthened to expand PPP/PFI based on the newly formulated
Action Plan, such as improvement of initiatives in which local governments give priority to
the introduction of PPP/PFI.

Ⅴ． Multi-polarization of the Economy and Society
By promoting the Vision for a Digital Garden City Nation, the government is aiming to shift
from a unipolar concentration to a multipolar concentration.
Symbols of new capitalism will be both local and regional. Until now, Japan's economy andsociety have been unipolarly concentrated in one place from the perspective of people's lives,
corporate activities, and national land formation. For example, in Japan, 73% of the total
population lives in large cities with more than 500,000 people, higher than in other Westerncountries such as the U.S. (65%) and the U.K. (56%). 43
However, the COVID-19 pandemic has reaffirmed the importance of economic and social
multi-polarization. Since COVID-19, there has been a shift in population from urban centers
to more peripheral areas in large cities, and interest in rural migration has increased. Interestis exceptionally high among young people in their 20s and 30s. In addition to being attracted
to the natural environments (31.5%), reasons cited included the ability to work in rural areas
through telework (24.3%). 44
The development of digital technologies (DX) has bought with them the ability to shift oursociety from one which is unipolar to one which is multipolar. Digital services are a source of
new added value and are crucial to solving the challenges facing Japan's rural areas, such as
43 Basic Data P45: International Comparison of Concentration of Populations in Large Cities
44 Basic Data P46: Interest in Rural Migration

39

declining birth rates, aging populations, and depopulation. Digital technologies mean physicaldistance is no longer a minus. The farming, mountain, and fishing villages that support our
nation and the rich charms of these rural and regional areas, such as a relaxed lifestyle, will
act as a core to providing extensive support for new lifestyles. We will create, discover, andlaterally expand many small but vibrant local digital communities. We aim to build a win-win
relationship between Tokyo and the metropolitan area and rural regions.
A multipolar economic society will be created in which diverse regions, companies, humanresources, etc., become interconnected within this expanding network, creating added value.
1. Promoting the Vision for a Digital Garden City Nation(1) Infrastructure development for the realization of the Vision for a Digital Garden City
Nation1) Providing optical fiber connections, 5G, data centers, etc. in every corner of the country
Based on the Infrastructure Development Plan for the Vision for a Digital Garden City
Nation, digital infrastructure will be developed in urban and rural areas in an integrated manner.
For optical fiber connections, the government has set a mandatory target of achieving ahousehold coverage rate of 99.9% by the end of FY2027 and will make further improvements
in all areas where it is needed.
For 5G service, a mandatory target of 99% population coverage will be achieved by the endof FY2030. In addition, the deployment of local digital infrastructure, such as local 5G, will
be promoted.
Over the next five years, around a dozen regional data centers will be established to meetthe rapidly increasing demand for data and rebalance the concentration of data centers in theTokyo area.
The regional dispersion of Internet Exchanges (IXs), relay points for submarine cables andland networks (landing stations) will be promoted. In addition, a domestic submarine cablethat circles Japan (the Digital Garden City Superhighway) will also be completed by FY2025.
To enable the elderly and others unfamiliar with digital technology to learn how to use
digital devices in places familiar to them, Digital Supporters will be established, ensuring thatno one will be left behind.
2) Establishment of regional councils
To match the development of digital infrastructure and digital implementations in rural areas,regional councils will be established at the prefectural level, etc. with participation from local
governments, telecommunications carriers, and other social implementation stakeholders.

403) Establishment of the Vision for a Digital Garden City Nation Realization Fund
Measures will be considered to support hardware and software projects conducted bymotivated municipalities (cities, towns, and villages) for the planned implementation of digitaltechnology in rural areas in cooperation with private businesses.
4) Vision for a Digital Garden City Nation Koshien
The Vision for a Digital Garden City Nation Koshien events (Digiden Koshien) will be held
to uncover pioneering examples and ideas for future services in rural areas and expand theiruse in other areas. The events will award these initiatives and will see the participation fromlocal governments, businesses, and citizens. The first Digiden Koshien for local governments
will be held in summer this year, and the second Digiden Koshien will be held toward the endof this year in which a wider range of citizens and businesses are invited to participate.
5) Improving living environments in hilly and mountainous areas through digital technologies
Populations in hilly and mountainous areas are rapidly declining and aging. As a result, an
increasing number of villages are finding it difficult to maintain and manage farmland andagricultural production activities and maintain their basic functionality as villages.
Despite these circumstances, efficient implementations of combined services through digitaltechnologies have led to examples of businesses emerging which would be difficult to establish
as a single entity. Examples include collecting agricultural products from elderly farmers andconducting mobile sales for those who have difficulty shopping,
To laterally expand these efforts, the government will promote the creation of organizations
that provide mutual support over broad geographic regions.
6) Mass overhaul reforms of regulations and systems and implementing demonstration
projects
The Special Commission on Digital Administrative Reform will intensively reform thefollowing seven analog regulations: i) visual inspection regulations, ii) regular inspection andother inspection regulations , iii) field audit regulations, iv) residency/full-time regulations, v)
written-notice regulations, vi) in-person course regulations, and vii) on-site viewing
regulations.
A demonstration project will confirm whether digital technologies can replace existing
regulations and systems.
The government will also promote Super City and Digital Garden Health Special Zone thatare expected to lead the Vision for a Digital Garden City Nation.

41

(2) Promoting agriculture, forestry, fisheries, tourism, and education to support the
Vision for a Digital Garden City Nation
1) Promoting agriculture, forestry, and fisheries, along with the Strategy for Sustainable Food
Systems MeaDRI, toward establishing food security
To establish food security in Japan, food self-sufficiency will be improved by creating
robust agriculture, forestry, and fisheries industries.
Since international raw materials prices for chemical fertilizer and feed remain high, thegovernment considers establishing countermeasures, including how to procure stable suppliesof these resources.
i) Implementation of the Strategy for Sustainable Food Systems MeaDRI
Initiatives will be promoted at every stage, from production to consumption. The initiatives
include reducing the use of chemical pesticides and fertilizers, promoting organic farming, andvisualizing the reductions of environmental impact at the production stage for appropriate
assessment by consumers.
ii) Expansion of the Export of Agricultural, Forestry and Fishery Products and Foods
The government aims to achieve 2 trillion yen of agricultural, forestry and fishery products
and food exports in 2025 to reach its target of 5 trillion yen in 2030. The program will certify
export promotion organizations by product category to support demand development. It will
also support the development of export-oriented facilities and promote investment bybusinesses trying to export their products.
iii) Smart agriculture, forestry, and fisheries
Using digital technologies for agriculture, forestry, and fisheries will turn them into growthindustries that are more attractive to young people. To achieve this goal, the government will
promote smart agriculture, forestry, and fisheries that utilize digital technology by fosteringand supporting agricultural support services and human resource development. Regional
consortiums of interested parties will be formed to expand the digital implementation as a hubof the region.
2) Support for industry that is tailored to local conditions, such as the revival of inboundtourismWith regard to the tourism industry, the government will stimulate domestic demand while
ensuring safety and security and will promote the revitalization and high-value-added
development of tourist destinations.

42

To achieve this, the government will promote introducing a customer management system
and renovating accommodations to accommodate individual travelers. Furthermore, whileclosely monitoring infections in Japan and abroad, the government will promote improvements
to systems for accepting foreign tourists to enable inbound travel to recover.
3) Improving the ICT environment for education
The GIGA School Concept will be promoted through developments such as providing one
computing device per student and installing high-speed telecommunications networks. Digitaltechnology will be used to enable optimal learning for children regardless of distance and time
constraints.
To enable these improvements, we will develop a system to support computer
troubleshooting and ICT support in schools and provide enhanced ICT training for teachers.
In addition, a demonstration will be conducted to examine advantages and issues in preparation
for the full-scale introduction of digital textbooks in FY2024.
(3) Ensuring security as a precondition for Vision for a Digital Garden City Nation
1) Accelerated investment in national resilience and disaster prevention and mitigation
Based on the Fundamental Plan for National Resilience, necessary and sufficient budgets
will be secured, self-help efforts, mutual assistance, and public help will be appropriately
combined, and integrated hard and soft initiatives will be vigorously promoted.
Based on medium- and long-term goals, the government will promote the Five-Year
Acceleration Plan for Disaster Prevention, Disaster Mitigation and Building National
Resilience. The plan aims to further accelerate and deepen related efforts and specifies thescale of additional projects required. We will thus promote the creation of a nation that will
not succumb to disasters. In addition, we will promote advancements in disaster prevention
and mitigation through AI, drones, and other digital technologies.
We are entering the 10th year since the Basic Act on National Resilience Contributing toPreventing and Mitigating Disasters for Developing Resilience in the Lives of the Citizenry
was enacted. Results and experience gained to date will be reflected in the next Fundamental
Plan for National Resilience. At the same time, the importance of continuing and stabilizing
efforts to strengthen our nation through a clear medium- to long-term outlook will beconsidered, even after the Five-Year Acceleration Plan is complete.
2) Development of transportation and logistics infrastructure to support a prosperous garden
city nation
To support rural lifestyles and economic growth, efforts will be made towards developing43

and utilizing high-speed transportation networks such as expressways, new Shinkansen lines,
the Linear Chuo Shinkansen, and international hub airports, ports, and other facilities.
Regarding the Linear Chuo Shinkansen, we will promote early installation as a fast and stabletransportation infrastructure connecting the three major metropolitan areas and theirsurrounding areas. At the same time, we will pursue efforts to resolve issues pertaining towater resources, environmental conservation, etc.
Regional transportation networks such as buses and railroads will be rebuilt while
promoting the implementation of new technologies such as mobility as a service (MaaS) andautomated driving. In addition, the convenience of rural transportation services will be
improved by demonstrating a co-creation business model that combines transportation withother fields such as medical care and long-term care.
The use of a nationwide unoccupied house/lot information registration system will bepromoted alongside developing satellite offices and other environments that make use of
vacant houses, etc.
2. From a unipolarly managed virtual space to a multipolar virtual space
As various social activities become digitized, problems associated with the resulting
centralization of digital spaces are becoming apparent. Examples include data being enclosedby specific platforms, the uneven distribution of wealth due to winner-take-all situations, andconcerns about data handling.
Against this backdrop, there is a growing trend of creating new value through promoting amore decentralized and reliable Internet and spreading and expanding digital assets on theblockchain, with users managing and utilizing data themselves. The government will makeefforts to produce the required environment for this decentralized digital society.
(1) Establishing a new framework of trust for the Internet
To realize the Trusted Web, a new trust framework on top of the Internet, which provides
mechanisms to strengthen data control by individuals and corporations without relying on
specific services, and mechanisms to verify exchanged data, the government will work to detailthe functions needed to realize this concept. As part of these efforts, support and verificationof use cases in various industrial fields will be implemented to promote international
standardization.
(2) Improvements to promote Web 3.0, such as using NFTs (non-fungible tokens) basedon blockchain technology
Innovations are emerging, including NFTs (non-fungible tokens) and DAOs (decentralized

44

autonomous organizations), which are based on blockchain technology. Blockchain
technology can potentially change the nature of the traditional Internet and transform society
through the multi-polarization of virtual spaces, including by directly interconnecting
independent users. In response, consideration of developing an environment for theacceleration of Web 3.0 will be promoted.
(3) Expanded use of content, including the metaverse
In regard to the use of content (including the metaverse), we will consider measures toenable simple and centralized rights processing for the licensing of a vast and diverse range of
copyrighted works and submit relevant bills to the ordinary Diet session next year. Thus,taking advantage of digitalization and networking as growth opportunities.
We will also promote the further sophistication of the content industry.
(4) Promoting FinTech
Opportunities for businesses to raise funds by issuing security tokens (securities digitizedin the form of tokens: digital securities) will be expanded, thereby providing investment
opportunities for a broader range of investors, including individual investors, and encouraging
asset building. Currently, secondary trading of security tokens is executed only over-thecounter transactions with brokerage companies. A system will be promptly established toallow proprietary trading systems to handle security tokens as well.
When crypto-asset exchange service providers are to handle new crypto assets, theauthorized self-regulatory organizations require extended periods for preliminary screening.
These screening criteria will be relaxed while still taking user protection into consideration.
When there are multiple digital items or, content of the same type, issued on blockchains, it
is unclear whether they legally qualify as crypto assets. Therefore, interpretive guidelines will
be provided with an eye to whether or not they has economic functions as a means of payment.
3．Promoting overseas business investments by Japanese companies
With a view to strengthening Japanese growth potential and ensuring its economic security
in the post-COVID-19 world economy, it is imperative for Japanese companies to expand theirbusiness globally in the fields where they have technological advantages. Many Japanesecompanies have advanced technologies not only in hardware but also in software, including
business operations and services. However, they tend to be conservative in their investment
decisions in the face of risks and hurdles inherent in overseas business. Under thecircumstances, the Government will support overseas business investments by the companies
with advanced technologies and will, including SMEs' activities to develop new products and45

create overseas sales channels. Such efforts will increase repatriation of profits back homethrough dividend payments to the parent companies, which in turn could lead to broad-based
wage hikes and enhanced R&D investments in Japan.
Specific measures to be taken by the Government will include the following: i)working as
one team to systematically support overseas investments from the initial stages, throughstrengthened

collaboration among relevant

ministries, government agencies, andembassies/consulates inside and outside of Japan; ii)supporting overseas investments fromupstream to downstream through information sharing and financial assistance, as well as
effective use of equity investment functions of government agencies to be explored; andiii)taking the lead and reaching out to international organizations, governments of like-mindedcountries, and global investors in order to create more business opportunities in such areas asdecarbonization and digitalization, with the aim of developing cooperative projects.
In order to plan and work out the measures mentioned above and coordinate with related
ministries and agencies, the Global Business Investment Support Office (tentative name) willbe established in the Cabinet Secretariat.
Ⅵ． Initiatives in Individual Fields
1. Responding to changes in the international environment(1) Strengthening economic security
Supply chain resilience and public-private technical cooperation will be promptly
implemented under the Economic Security Promotion Bill.
Specifically, after analyzing supply disruption risks (including future risks) in the supply
chain, mid-to-long-term support measures will be developed. This will enable stable suppliesof critical commodities, which are also the foundation of digitization and carbon neutrality, tobe promptly secured. Examples include semiconductors and critical minerals, including rareearth metals, batteries, and pharmaceuticals. Additionally, the government will strengthen
projects for the practical application of advanced key technologies in fields such as AI,
quantum technologies, space, and the ocean, aiming to promptly reach a scale of 500 billion
yen.
Furthermore, necessary measures for granting qualifications to those who handle criticalinformation will be studied by verifying specific cases from international joint research, etc.
Ways to support private companies responsible for developing and implementing
technologies vital for future generations, such as those possessing cutting-edge and sensitivetechnologies, will be considered, including enhancing capital strength.
Considering the importance of strengthening measures against cyber-attacks through46

cooperation between the public and private sectors, the government will consider the necessary
measures to strengthen this area. Examples include human resource development measures,such as the further expansion of cyber-related education and research infrastructure andinstitutional improvements to strengthen public-private partnerships to ensure cyber security.
(2) Promoting external economic partnerships
Japan has and will continue to be a trading and investment power. It will grow by connectingwith the rest of the world and allowing the free flow of people, goods, money, and digitaltechnologies to and from the world. The government will continue to build a nation that isopen to the world.
The idea of a “Free and Open Indo-Pacific” advocated and promoted by our country has
gained support from many countries. In cooperation with the U.S., Australia, India, ASEAN,
Europe, and other countries and regions, and through utilizing the Japan-Australia-India-U.S.
(Quad) efforts, Japan will strategically work towards the realization of this “Free and Open
Indo-Pacific.”
Discussions on supply chain resilience, decarbonization and clean energy, digital economy,
and other issues will be held among participating countries in the Indo-Pacific Economic
Framework (IPEF). To achieve sustainable and inclusive economic growth in the Indo-Pacificregion, Japan, in cooperation with partners including the U.S. and ASEAN countries, will aim
to achieve tangible results which we can produce quickly.
Japan will work to ensure full implementation of the Regional Comprehensive Economic
Partnership (RCEP) Agreement, which entered into force in January 2022. Japan will also leadthe discussion of the UK's accession procedures for the Trans-Pacific Partnership (CTTPP)
agreement while remaining at a high level.
Through the development of quality infrastructure utilizing Japan's advanced technologies,
Japan will simultaneously obtain solutions to social issues and contribute to sustainableeconomic growth in the Asia-Pacific.
Japan will also play a central role in international rule-making to realize DFFT (Data Free
Flow with Trust).
2. Space
By 2025, Japan will establish constellations of small satellites through public-private
partnerships. This system will enable quick assessments during a large-scale disaster, even atnight or when it is raining or snowing. In addition, the development and demonstration of nextgeneration technologies such as space optical communication networks will also be promoted
to increase communication speed and capacity and eliminate concerns about interception and47

interference of communications.
Additionally, to enable more domestic launches of commercial satellites, we will exert
efforts to strengthen the international competitiveness of core launch vehicles such as the H3
Launch Vehicle. The commercialization of small commercial launch vehicles, thedevelopment of spaceports, and the development of human resources to support these activities
will also be promoted.
The Quasi-Zenith Satellite System, which enables more precise positioning without relying
on other countries' GPS systems, will be strengthened to realize a so-called Geospatial Society.
Furthermore, the successor to the geostationary meteorological satellite Himawari, which will
dramatically enhance our observation capabilities, will also be developed to improve theaccuracy of forecasts of torrential rains and typhoons.
In addition, the Martian Moons eXploration (MMX) project and the Artemis Program,which conducts manned activities on the Moon, will be promoted to achieve the first collection
and return of samples from the Mars-moon system and a Moon landing by Japanese astronauts
in the late 2020s.
3. Oceans
We will enhance the activities for sharing ocean data among the members of both the public
and private sectors for the utilization. The construction of an Arctic research vessel is steadily
underway with a view to it entering service in FY2026.
We will develop technologies for autonomous underwater vehicles that can be used in deep
water. This will advance oceanographic observations in exclusive economic zones and develop
domestic marine resources such as seafloor hydrothermal deposits, methane hydrate, and rareearth muds in the deep waters around Okinawa and other areas. In addition, the developmentof unmanned ocean observation systems will also be promoted.
.Furthermore, demonstrations, etc. of marine mobility technologies for next generation
including autonomous surface vehicles and remotely operated vehicles will be conducted.
We will promote the appropriate utilization of the ocean area through offshore wind power
generation, the establishment of domestic supply chains, and the development of criticaltechnologies in the marine industry, as well as enhancing the competitiveness of the shippingand shipbuilding industries.
4. Developing financial markets(1) Quarterly financial statements
Quarterly reports under the Financial Instruments and Exchange Act will be abolished andconsolidated into the Exchange's quarterly financial statements. Legislation regarding this will48

be submitted after specific measures are considered by the end of this year.
(2) Expanding Japan’s role as an international financial center and training asset
managers
The government aims to attract more foreign financial businesses to Japan's financial andcapital markets in the future to expand Japan’s role as an international financial center. This
will be promoted through collaborative efforts by public and private sectors to support
financial startup, including visa acquisition, foreign language support through the use of AI
multilingual translation technology, etc., and support for aspects of lifestyle such as housing
and medical care, provided by the Financial Market Entry Office, which conducts all
promotions, examinations of license registration, etc. in Englis.
These actions will attract overseas financial businesses and high-level financial
professionals with strong operational capabilities, while creating jobs and revitalizing the
economy as well as developing and expanding high-level human resources in finance,
including asset managers, through interactions with Japanese businesses and human resources.
Additionally, asset managers will be added to the scope of the credit-guarantee system tosupport the financing of new asset management businesses.
(3) Scope of business of bank and firewall regulations to be reviewed
Last year's amendments to the Banking Act and other legislation have allowed banking
groups, which had a limited scope of businesses, to conduct business that contributes todigitization, regional revitalization, and other areas. Based on this, the government willencourage banks to actively engage in projects that contribute to digitization and regional
revitalization, etc., while following up on the implementation of new projects.
To enable one-stop financing and funding by financial institutions, the firewall regulations(prohibiting the non-consensual sharing of clients’ non-public information between banks andsecurities companies in a financial group) were revised to make consent unnecessary when theclient is a foreign corporation, listed company, etc., among others. In addition, considerations
will be made of how the firewall regulations will apply to information on SMEs, etc., whileworking to prevent harmful effects such as conflicts of interest and abuse of dominantpositions.
(4) Promote investment instead of savings through efforts by financial institutions
Households must receive more appropriate advice and solicitation from financial
institutions, thereby promoting asset building.
Experts have pointed out that the Financial Instruments and Exchange Act has different49rules depending on whether advice is compensated. Even for similar advice, the system's
application differs depending on how fees, etc., are to be received. These issues may hinder
flexible business and fee design for consulting and advice by companies such as securities
firms. While ensuring that consulting advice businesses can operate, from the perspective ofcustomer-oriented business operations, this and other systems will be reviewed to ensure thatappropriate advice and solicitation are provided that contribute to stable asset formation
amongst the public.
To encourage asset management companies, etc. to supply financial products that benefit
clients, measures should be taken to promote product governance (for example, structuring
financial products and setting fees in line with client needs, providing information that
contributes to appropriate product selection, and evaluating and verifying such initiatives) andto strengthen the governance of asset management companies, etc. to ensure productgovernance is performed.
(5) A full-scale, bold shift to business loans based on business potentials
Since DX and GX are causing changes to industrial structures, it is difficult for startups
without tangible assets such as factories to obtain financing without real estate collateral or
personal guarantees. Additionally, since raising funds through equity investment alone dilutes
management equity, an environment must be created to allow growth capital to be raised in
the most appropriate way according to the needs of management.
Based on this perspective, financial institutions will be required to evaluate and financebusinesses based on the value of the business, such as its future potential, and not on real estatecollateral. Therefore, we aim to submit a related bill to the Diet as soon as possible to establish
a system that allows startups and other businesses to raise growth capital from financial
institutions establishing security interests over all asset.
5. Global Health
Examples of health investment, nutrition measures, and other initiatives will bedisseminated and investment impacts will be will be visualized to attract private capital to theglobal health sector (global health, Universal Health Coverage (UHC)). In addition, to increase
procurement of pharmaceuticals and medical equipment from Japanese companies by groups
like international organizations, procurement information on these groups will be collected
and provided, along with accompanying support, to build relationships with procurement
divisions, etc.
6. Promotion of culture, the arts, and sports

50

The preservation and utilization of cultural properties and cultural and artistic education will
be promoted while ensuring that children have opportunities to view and experience culture
and art. These industries will be promoted by supporting cultural and artistic activities andvitalizing the art market.
Culture-related industries will also be promoted, such as through initiatives on promoting
filming locations in Japan and on e-sports.
Sports DX and the international expansion of Japan’s sports business will also be promoted
to help make the field of sports a growth industry.
7. Creation of new industries in Fukushima and other north-eastern regions
The government will promote the Fukushima Innovation Coast Framework, aiming to build
new industrial bases in the Hamadori region. We will work to ensure the long-term, stable
operation of the Fukushima International Research and Education Organization and accelerate
efforts in research and development, industrialization, and human resource development.
The government will also do its utmost to enable restoration and recovery from the Great
East Japan Earthquake, including actions like fostering understanding of safety throughmonitoring, supporting the industries including fishery to continue and expand their businesses,
and addressing the reputational effects of the discharge of ALPS treated water at the TEPCO's
Fukushima Daiichi Nuclear Power Station.

Ⅶ． A Framework for the Realization of New Capitalism
1. Formulation of process chart and following-up
A five-year timeline will be created to promote this action plan, and follow-ups will be
conducted every fiscal year on the plan's implementation, promoting a PDCA cycle.
2. Cooperation between public and private sectors
New capitalism can only be realized through the public and private sectors carrying out theirrespective roles. Therefore, for each item in the plan, a division of roles between the public
and private sectors will be clarified and promoted.
The government will work harder than ever to draw out the maximum power from theprivate sector, asking it to use to make the most of this power to solve social issues currently
considered the government's domain.
3. Economic and fiscal management framework
The economic and fiscal management framework will adhere to three key points: boldmonetary policy, flexible fiscal policy, and a growth strategy that stimulates private investment.
Amid the difficult fiscal situation, reforms will be carried out in two ways, keeping in mind

51the medium and long-term sustainability of public finances.
The first is the single-annual-budget principle. A budget based solely on a single fiscal year
makes it difficult to see the country's long-term direction and is less predictable, making it
difficult to derive expected future growth rates. The adverse effects of the single-year budget
principle will be corrected by utilizing funds and other resources according to the nature of the
project.
Second, dynamic thinking will be utilized for tax reforms, considering future effects.

52Grand Design and Action Plan
for a New Form of Capitalism
Basic Data

June 7, 2022Impact of Training○ According to an analysis by British economists, when the proportion of trained employees in the industry
increases by 1 percentage point, the labor productivity per worker in the same industry grows by 0.6% and theaverage wage per worker in the industry rises by 0.35%.

（％）

Impact on wages and productivity from the increase in the
proportion of trained employees by 1 percentage point

0.7
0.6

0.602

0.5
0.4

0.351

0.3
0.2
0.1
0.0

Labor productivity

Wages

Note: Data on capital, labor, and output, categorized by industries, excluding service sectors, for 1984 to 1996 from the Annual Census of Production, is used. With
regard to information on training, data used is for the proportion of trained workers by industry who responded that they have received education or training in thepast four weeks, connected with their jobs, or jobs that they might be able to do in the future.
Source: Dearden, L., Reed, H., Van Reenen, J., 2006. The Impact of Training on Productivity and Wages: Evidence from British Panel Data. Oxford Bulletin of
Economics and Statistics 68 (4), 397-421.

5

Reference: Comparison of HHMI and NIH Schemes
Howard Hughes Medical Institute (HHMI) research fellowshipResearch funding period 7 years
Funding is provided to individual scientists and not toward projects.
Funding subjects

Research contents may be adjusted based on the progress of theresearch.

National Institutes of Health (NIH) R01 Research Project
Grant Program

3-5 years

Funding projects with clearly defined deliverables, notindividual scientists.

Review upon renewal of In the first review, failure is tolerated and the focus is placed on

From the first review, the project is evaluated on whether

research funding period whether the researcher is engaged in challenging research work.

research results have been produced.

Transition period

Even if the grant is not renewed in later years, funding is notsuspended immediately. Two-year phase-down upon non-renewal.
Has produced 33 Nobel Prize winners out of 918 recipients (approx.

Main recipients3.6%). Japanese recipients include Susumu Tonegawa (recipient of
the 1987 Nobel Prize for Physiology or Medicine), etc.

Funds dry up upon non-renewal.

Has produced 168 Nobel Prize winners out of approx.
300,000 recipients across the whole NIH (approx. 0.06%)

Note: Information added/updated with reference to the HHMI website, based on Azoulay et al. (2011).
Source: Pierre Azoulay and Joshua S. Graff Zivin & Gustavo Manso, 2011. “Incentives and creativity: evidence from the academic life sciences,” RAND Journal of Economics, vol. 42(3), pages 527-554, 09.,
and HHMI website.

8Effects of Implementing Selection Programs at Early Stage○ It has been demonstrated that young people selected by NIH for its Associate Training Program (a program that selects young university graduates)
are likely to make significant achievements in later years, such as receiving the Nobel Prize (studies conducted by MIT economists).
○ Possible reasons for this includes guidance from excellent researchers during and after the program, interpersonal exchanges between those selected
for the program, strengthening of the independence of research through funding, as well as the signaling effect, among others.
○ In Japan, too, there is the possibility of expanding selection and support programs for very young researchers, such as at the point of their graduationfrom university.

NIH Associate Training Program Introduced in 1953. Provides a space for graduates of
medical schools to study research methods for two to
three years under outstanding researchers.
 As it allows those in the program to obtain researchfunding, it enables independent research without
being subjected to the need to raise funds.

Differences between young people selected,
and not selected, for the NIH Associate
Training Program
Nobel Prize
recipient

Selected for
HHMI
research
program

Selected as
member of
U.S.
academies ofscience/medic
ine

Recipient of
NIH
MERIT
Award

Attendees

7(0.36%)

89(4.62%)

32(1.66%)

79(4.10%)

Nonattendees
not selected
for theprogram0(0.00%)

15(1.22%)

0(0.00%)

14(1.18%)

Note: Comparison of 1,929 program attendees and 1,146 non-attendees who were not selected in the final round despite passing the initial admissions screening, from among 3,075 applicants who applied
for the program between 1965-75.
Source: Prepared based on Azoulay, Pierre & Greenblatt, Wesley H. & Heggeness, Misty L., 2021. "Long-term effects from early exposure to research: Evidence from the NIH “Yellow Berets”," Research
Policy, Elsevier, vol. 50(9).

9Decreased Rate of Business Exit Through Gradually Starting a Business via a Side Job○ According to a study by business scholars, side jobs allow people to try out new things and also contribute to the building up ofskills. In a comparison of those who started a business directly from paid employment with those who started a business
gradually through a side job, taking the probability of business exit in the case of direct entrepreneurship as 100, the probabilityof business exit when starting a business gradually through a side job fell to 67%.
○ This is because starting a business through a side job makes it possible for a person to learn about the feasibility of theirbusiness idea, and also allows them to learn entrepreneur skills through practical work.
Likelihood of business exit when starting a business directly from paid employment, and starting a business through a side job
Ratio based on probability ofbusiness exit when starting abusiness directly as 1
1

1

0.8

0.67

0.6
0.4
0.2
0

No side jobs (starting a business directlyfrom paid employment)

With side jobs (starting a business gradually
through a side job)

Note: Based on data from the National Longitudinal Survey of Youth, 1979 cohort (NLSY79). NLSY79 is a survey conducted by the Center for Human Resource Research at the Ohio State University withsupport from the U.S. Bureau of Labor Statistics. The survey is conducted on 12,686 men and women who were 14 to 22 years old at the time of the first survey in 1979. With the exclusion of nonrespondents and employees working fewer than 30 hours per week, 2,198 people who became newly self-employed from 1994 to 2008 were the subjects of this analysis.
The estimation method was to analyze how the probability that full-time entrepreneurs (self-employment) fail to survive in full-time self-employment jobs changes over time. Individual attributes such as
gender, age, education, family net income, firm size, pay, number of prior jobs, industry tenure, etc. were added to the explanatory variables, and their impact was controlled.
Source: Joseph Raffiee & Jie Feng, 2014. “Should I quit my day job?: A hybrid path to entrepreneurship”, Academy of Management Journal

11

Effects of Accepting Side Job and Multiple Job Human Resources○ Companies that accept personnel holding multiple jobs/side jobs experienced effects such as success in securing humanresources that the company does not possess (49%), success in resolving labor shortage problems (45%), and the emergence ofinnovation and development of new businesses (36%).

Effects of accepting external personnel with side jobs/multiple jobs (2020, multiple answers)
Able to secure personnel with knowledge and skills
that personnel in the company do not possess

48.5%

Able to resolve labor shortage problems

45.0%

Led to emergence of innovation and development of
new businesses

36.0%

Promoted diverse working styles

31.0%

Led to changes in organizational culture and climate

23.0%

Able to hire full-time employees

19.5%

Able to keep personnel costs lower than in typicalemployment formats
Able to incorporate diverse human resources into
the organization

18.0%

Enhanced corporate brand image

17.0%

Able to form networks with external human resources

17.0%

Able to utilize human resources from other regions

16.5%

19.0%

Stimulated existing employees
No particular effects felt
Do not know

0%

12.5%
6.5%
4.5%
10%

Response rate
20%

30%

40%

50%

60%

Note: Responses from HR officers (200 people) who answered that the company is accepting external personnel who hold multiple jobs/side jobs. Multiple answers were accepted.
Source: Prepared based on Recruit's "2020 Collection of Survey Data of Trends on Multiple Jobs and Side Jobs" (survey conducted in December 2020).

13

International Comparison of the Gender Wage Gap○ The gender wage gap of full-time workers in Japan (regular and non-regular employment) is large compared to other developed
economies.
Gender wage gap (The ratio of median female
wage lower than median male wage)

25%

International comparison of the gender wage gap

22.5%

20%

17.7%
16.1%
13.9%

15%

12.3%

11.8%

10%

7.6%

5%

0%

Japan

U.S.

CanadaGermany

UK

FranceItaly

Note: The gender wage gap indicates how much lower the median female wage is compared to the median male wage. The comparison is for full-time workers in regular and nonregular employment. Values for Japan, U.S., Canada, and UK are for 2020, values for Germany and Italy are for 2019, and values for France are for 2018.
Source: Prepared based on OECD Stat.

14

International Comparison of Proportion of Women Working Part-Time○ The proportion of women working part-time is 40% in Japan. This is a relatively high level compared to Europe and the U.S.

International comparison of proportionof women working part-time
45%
40%

39.5%
36.3%

35%

34.5%
31.5%

30%
24.5%

25%

19.7%

20%

15.7%

15%
10%
5%
0%

Japan

GermanyUK

Italy

CanadaFranceU.S.

Note: Values for Germany are for 2019; values for all other countries are for 2020. ”Part-time workers” is defined as workers who work for less than 30 hours per week intheir primary job.
Source: Prepared based on OECD Stat.

15

Issues in Disclosure of Sustainability-Related Information○ According to a questionnaire conducted on CFOs of listed companies in Japan, many companies responded as follows withregard to issues in disclosure of sustainability-related information: "selection of relevant indicators that should be monitored andgoal-setting (50%)," ”making it relevant to enhancing corporate value (47%)," "establishing processes and systems for gathering
the necessary non-financial information (40%)," and "inadequate discussions at the director level (32%)."In sustainability information reporting, issues with comprehensive
disclosure that is relevant to financial information (Multiple answers)
Selection of relevant indicators that should be monitored and goal-setting

50%

Making it relevant to enhancing corporate value

47%

Establishing processes and systems for gathering the necessary non-financial
information

40%

Inadequate proactive/independent discussions at the director level onsustainability issues

32%

Integration of responses to sustainability issues into the strategy

31%

Administrative burden of response

29%

Uniform standards not set for sustainability reporting
Other

0%

28%
2%

Percentage of respondents

5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Note: Responses from 461 listed companies in Japan. Survey period was from September 1 to October 8, 2021.
Source: Prepared based on KPMG Japan, "CFO Survey 2021"17

Size of Externalities in Research and Development○ According to a study by economists from MIT and Stanford, published in a reputable academic journal, a comparison of the increase in sales to acompany (marginal private return) and the positive and negative externalities to other companies as a whole (marginal social return), brought about
by the increase in research and development costs of individual companies, revealed that there are positive externalities, and that the social rate of
return is estimated to be more than 2.5 times that of private rate of return.
○ Therefore, there tends to be under-investment in research and development when it is left only to private companies, and it is important for both the
public and private sectors to put effort into research and development.

The marginal private and social return through R&D investment
（%）
60

55.0%

50
40
30
20

20.7%

10
0

The marginal private return foreach company

The marginal social return

Note: A study on 715 U.S. companies that acquired patents since 1963. Estimated by adding the positive externalities (spillover effect) from R&D by a certain company to othercompanies, spread through technology, and the negative externalities (spillover effect) of losing the product market share to other companies.
Source: Bloom, N., Schankerman, M. and Van Reenen, J. (2013), Identifying Technology Spillovers and Product Market Rivalry. Econometrica, 81: 1347-1393.

18International Comparison of Amount of Funding Raised Per IPO○ The amount of funding raised per IPO is 300 million dollars in the U.S. and 200 million dollars in Europe, but
only 60 million dollars in Japan.

International comparison of amount offunding raised per IPO (2021)

Amount of funding
raised per IPO(Hundred million dollars)
3.5
3.0

3.06

2.5
1.92

2.0

1.68

1.5
1.0
0.55

0.5
0.0

U.S.

EuropeAsia(excluding Japan)

Note: Aggregated by the countries where listed companies are located (including listing on SPAC).
Source: Prepared based on Dealogic data.

Japan

29

International Comparison of Opening Price Compared to Initial Price in IPO○ The initial price (the stock price achieved on the first day of listing) in Japanese IPOs is significantly higher (+49%) than the
opening price (the price at which the entrepreneur sells stocks at the time of listing). For this reason, the amount of funding
raised by entrepreneurs through IPOs is relatively small.

How much initial
price exceeds
opening priceInternational comparison of how much initial price exceeds
opening price in IPO

60%

49.0%

50%
40%
30%
21.8%
20%
10%

6.8%

9.4%

13.1%

15.7%

17.5%

0%
CanadaFrance

Italy

UK

U.S.

GermanyJapan

Note: Japan: 3,974 IPOs from 1970-2021, Canada: 811 IPOs from 1971-2021, France: 904 IPOs from 1983-2021, Italy: 413 IPOs from 1985-2018, UK: 5,309 IPOs from 1959-2020,
U.S.: 13,718 IPOs from 1960-2021, Germany: 840 IPOs from 1978-2020. Values obtained by dividing initial price by opening price and deducting 1 (average rate of returnon initial price)
Source: Prepared based on Tim Loughran, Jay R. Ritter, Kristian Rydqvist, "Initial Public Offerings: International Insights" (March 15, 2022)

30

State of Freelancing in Japan○ It is estimated that 4.62 million people in Japan are working as freelancers (2020, Cabinet Office).

○ They are engaged as freelancers in a wide range of industries, including sales, lecturers/instructors,
construction/site work, design/content creation, and delivery (2021).

Agriculture, forestry, fishery
Other (Site work)
Cleaning, maintenanceConstruction, site work
Maintenance, inspection, repair
Manufacturing, assembly, production process

Posting, flyer distribution
輸 輸Transportation,delivery）
Other (Life support services
F&B services
Pet-related services
Childcare, nursing care
Customer services
Esthetics, nail services
Styling, dressing, etc.
Hairdresser, beautician
Sale of daily necessities/groceries
Other (Professional)
Instrumental performance, singing
Acting, modelling
Massage, acupuncture, etc.
Medical services
Writing, article contribution, etc.

Professional administrative services such as
tax/legal affairs

Other (Design/Film production)
Advertising/flyer production
Animator, illustrator
Film/Image/Music production, editing
Cameraman
Naming, copywriting
Design production, content creation

Lecturer, instructor
Survey, research, consulting
Other (IT)Operator work, etc.
Software bug checks
System design, software development
Programming work
Information search, computation processing
ブ creation/administrationのWebsiteMechanical design, electrical technology, electrical design

Construction design, civil design, surveying techniques

Sales
Interpretation
Translation

Site work
Life support services
ProfessionalIT
Administrative

Design/Film
production
Other (administrative)
Call center, inquiry responding services
Organizing vouchers/slips
Creation of transaction documents
Correction, proofreading, scoring
Data entry, document input, etc.

0%Freelance industries
Response rate
7%

6%

5%

4%

3%

2%

1%

31
Note: Freelancers are defined as "self-employed persons or sole proprietors who do not have a physical store nor employees, but who gain income by utilizing their own experience, knowledge, and skills (excluding agriculture, forestry, and fishery workers) "Tabulation of responses to the question "Please select the item that is closest to the specific content of our work " (Single answer) (Number of responses: 7,188)
Source: Prepared based on the questionnaire conducted on freelancers, implemented jointly by the Cabinet Office, Japan Fair Trade Commission, MHLW, and The Small and Medium Enterprise Agency from July 20 to August 20, 2021, Cabinet Office, "Results of Survey on the Current Situation of Freelancers"Details of Trouble Encountered by Freelancers○ The problems most frequently encountered by freelancers are “delay in receiving payments” and “one-sided
changes to work contents,” both of which scored highest at 29.5%.

Details of trouble encountered by freelancers (Top 10)
Delay in receiving payments

29.5%

One-sided changes to work contents

29.5%

Decision to pay an unjustly low
remuneration
One-sided cancellation of acontinuing project

26.4%
25.7%

Non-payment/Underpaymentof remuneration

23.4%

Unreasonable deadline, technical,
or other demands

22.4%

One-sided cancellation of work before
it commences

20.9%
20.2%

One-sided reduction of remuneration
Unreasonable demands forcorrections/reworking

18.9%
13.6%

Sudden bringing forward of deadline

0%

10%

Response rate

20%

30%

40%

Note: Survey conducted through Internet research from October 1 to 5, 2021. Of 1,000 males and females aged 20 to 59 across Japan whose main occupation is freelance work, 397 who responded "Yes" tothe question "Have you encountered any troubles in your freelance work in the past year?" were the subjects. Includes those for whom multiple items are applicable.
Source: Prepared based on Japanese Trade Union Confederation (JTUC-RENGO), "2021 Survey on the Awareness and Actual Situation of Freelancers"

32

Impact of COVID-19 on Corporate Debt
○ The outstanding debt of Japanese corporations has increased by 72.2 trillion yen, from 565.2 trillion yen at theend of December 2019, before the COVID-19 pandemic, to 637.4 trillion yen at the end of December 2021.

Trends in outstanding corporate debt of nonfinancial corporations in Japan

Outstanding
corporate debt
(Trillion yen)

650

620

610.8

615.0

623.0

621.9

628.5

628.1

637.4

590
565.2

571.0

560

530

0
2019

2020

2020

2020

2020

2021

2021

2021

2021

31 Dec31 Mar30 Jun30 Sep31 Dec31 Mar30 Jun30 Sep31 DecNote: Changes in the total amount of debt (amount loaned out by financial institutions, amount of corporate bonds issued) in private and public non-financial corporations(special corporations such as public corporations and agencies, local public corporations, municipal enterprises, etc.). Preliminary figures are used for figures for theend of December 2021.
Source: Prepared based on Bank of Japan, "Flow of Funds Accounts" (Published on March 17, 2022)

35

Overview of Overseas Voluntary Liquidation and Business Rehabilitation Systems○ In European countries, unlike Japan, in addition to insolvency proceedings, there are systems in which rights modifications(such as reduction of financial obligations) can be made after a majority vote for business restructuring, etc., without requiring
the consent of all lenders, although court approval is required.
SystemScheme of Arrangement（SOA）
UK
Restructuring Plan (RP)*Introduced in 2020

Germany

StaRUG*Introduced in 2021

FranceAccelerated safeguard
proceedings*Introduced in 2014 (amended in
2021)

U.S.

Chapter11

Overview
Proceedings that enable changes to the rights ofcreditors through a majority decision, based on
court approval (Restructuring Plan is limited tocompanies that are in financial difficulties, etc.)

Proceedings that enable changes to the rights ofcreditors through a majority decision, based on
court approval

Requirements for approval

Status of utilization

Approval of creditors with three-quarters
or more of the debt amount and agreement
Several tens of cases perof the majority of the creditors
year
Approval of creditors with three-quarters *According to expert hearings
or more of the debt amount

Approval of creditors with three-quarters About 10 cases per year
or more of the debt amount*According to expert hearings

6 cases (2018)

Proceedings that enable changes to the rights ofcreditors through a majority decision, based on
court approval, in cases where arbitration to resolve
the problem by agreement fails.

Approval of creditors with two-thirds ormore of the debt amount

Proceedings that enable changes to the rights ofcreditors through a majority decision, based on
court approval

Approval of creditors with two-thirds or 8,333 cases (2020)
more of the debt amount and agreement of *According to the U.S. Federal
Courtsthe majority of the creditors*According to the Ministry ofJustice of France (case number
includes cases under the system
prior to accelerated safeguard
proceedings)

Source: Study conducted by METI

38

International Comparison of Mergers and Acquisitions of Start-ups○ Acquisition is important both as an exit strategy for startups and as a way of promoting open innovation amongst large preexisting corporations.
○ Japan has an extremely low number of merger and acquisitions in start-ups in comparison with Europe and the U.S.

(Number of cases)
1,600International comparison of mergers and acquisitions of start-ups (2018)
1,473

1,400
1,200
1,000
800
600
400

244

200

60

49

29

15

FranceGermany

China

Japan

0

U.S.

UK

Note: Number of mergers and acquisitions in FY2018, within 10 years from establishment.
Source: Prepared based on Mitsubishi Research Institute, "Survey and Research on the Approach to Business Integration of Large Companies and Venture Companies,"(commissioned study by METI, FY2018)40

New Corporate Forms for Public Roles○ Some countries have corporate legal system which makes companies play public roles.
○ In the U.S, this takes the form of benefit corporation legislation.
1. Overview○ Benefit corporation legislation has been enacted to fill in the gaps of the corporate law that has not set out a position for companies that place
the focus on social responsibility. It is regarded as a new corporate form that integrates social objectives with business formats, and ispositioned as the fourth sector after the three sectors of (1) Corporations/Economy, (2) Government/Public policy, and (3) Civil society.
○ In the U.S., the first benefit corporation law was enacted in the state of Maryland in April 2010. Thereafter, it has been legislated in 37 states,
while four other states are in the process of developing the legislation.
○ The motivation for selecting benefit corporations as a corporate form include “allows us to have a way that I think the values of my company
can continue even after it is sold and its way down the line . . . ” (sports equipment manufacturer, Patagonia), and "tells the world [these are]our values, it also more specifically tells our shareholders that this is important for us and we are going to prioritize this." (spectacles
manufacturer, Warby Parker).

2. Details of legislation○ In the U.S., corporate law is a state law so the details vary from state to state. State benefit corporation legislation have been drafted mainly
based on two types of legislation: Model Benefit Corporation Legislation and Delaware Public Benefit Corporation Statute. They sharemany points in common, as set out below:− There is a need to state clearly, in the articles of incorporation, that the company is a benefit corporation.
− State law stipulates that directors have the duty to consider the fulfilment of public interests in addition to the interests of shareholders.
Even in the case of incorporated companies, directors may consider the interests of other stakeholders apart from those of the shareholders
in order to enhance shareholder value. However, the directors of benefit corporations are required to consider the interests of otherstakeholders. In other words, they are obligated to carry out multi-stakeholder management.
− While it is possible to convert from a regular incorporated company, it is necessary to gain the approval of two-thirds or more of theshareholders.
− There are no restrictions on the distribution of surpluses (dividends). In short, it is permitted to pay out dividends.
− Benefit corporations do not enjoy any tax benefits.

41

Status of the Establishment of Benefit Corporations○ According to a study conducted on the U.S. in 2018, between October 2010 when the first benefit corporation
law was enacted in Maryland, until December 2017, 7,704 benefit corporations were established or wereconverted from incorporated companies. These have expanded widely across the whole of the U.S.
Proportion of benefit corporations in the U.S.
by state (April 2018)
State

Proportion of benefit corporations
by state against all benefit
corporations in the U.S.

Number of benefit corporations in the U.S. by state(July 2018)

State

No.

State

No.

State

No.

Arkansas

13

Indiana5

Oregon2028

Arizona10

Kentucky1

Pennsylvania

88

California

247

Louisiana

12

Rhode Island

8

Colorado

603

Massachusetts

67

South Carolina

16

Oregon26%

New York

19%

Nevada18%

Connecticut

67

Maryland

121

Tennessee

3

Delaware

16%

DC

12

Minnesota

37

Texas

0

Colorado

8%

Delaware931

Montana

1

Utah

36

Florida35

Nebraska

2

Virginia0

California

3%

Georgia1

New Hampshire

54

Vermont0Maryland2%

Hawaii14

New Jersey

5Kansas0

All other states

9%

Idaho

14

Nevada1362

West Virginia

0

Illinois49

New York

1447

Note: The number of benefit corporations were surveyed by inquiring with the respective state governments and other means.
Source: Ellen Berrey. 2018. “Social enterprise law in action: organizational characteristics of U.S. benefit corporations” Transactions: The Tennessee Journal of Business Law,
Vol. 20, 201842

Investors in Benefit Corporations○ A characteristic of investors in benefit corporations is that in addition to investors who focus on the social andenvironmental impact, there are also investors who pursue profits.
Top 10 investors with a high number of deals in Delaware’s
benefit corporations (Total between 2013 and 2019)
Investors

No. of deals

Investment
strategy

Techstars

19

Traditional

Village Capital

17

ImpactPlug and Play Tech Center

16

Traditional(provides investment and management support fromthe early stages)

15

Traditional

XRC Labs

15

Traditional

Y Combinator

15

Traditional

MassChallenge

14

Traditional

Candide Group11

ImpactFirst Round Capital

10

Traditional

Kapor Capital

10

Impact500 Startups(helps launch businesses like Dropbox and AirBnB)

Top 10 investors with a high value of total involved rounds in
Delaware’s benefit corporations (Total between 2013 and 2019)
Investors

Total involved
rounds(Unit: Hundred
million dollars)

Investment
strategy

Google Ventures

5.59

Traditional

General Catalyst

4.75

Traditional

Thrive Capital

4.53

Traditional

Allianz X

4.20

Traditional

SoftBank Group

4.20

Traditional

OurCrowd

3.12

Traditional

Omidyar Network

1.85

ImpactLearn Capital

1.82

Traditional

Andreessen Horowitz

1.68

Traditional

XL Innovate

1.67

Traditional

Note: The research was conducted on 295 benefit corporations in Delaware, for which data could be obtained by the authors of the paper. For these companies, out of all the funding rounds (707 cases)
between 2013-2019, the funding rounds for which the specific investors were identified (about half of the 707 cases) were tabulated by investors. The investors include venture capitals, accelerators,
incubators, angel investors, and PE/hedge funds.
Source: Michael B. Dorff, James Hicks and Steven Davidoff Solomon. 2021. “The future or fancy? an empirical study of public benefit corporations” Harvard Business Law Review Volume 11, Issue 1.

43

The Fair Trade Commission’s Advocacy Functions○ The Fair Trade Commission conducts investigations in areas where competition is lacking due to trade practices
or regulations, and advocates improvements to these trade practices or reviews of regulations.

Examples of advocacy in recent years＜Understanding the actual situation with regard to the process of setting opening prices in new IPOs (published on January 28, 2022)>• Investigation into factors that could cause initial prices to exceed opening prices significantly in initial public offerings (IPOs) in Japan.
• Pointed out the risk of problems related to the Antimonopoly Act in cases where lead-manager companies in a dominant bargaining
position cause newly listed companies to suffer unfair disadvantages in light of regular commercial practices, such as by setting opening
prices unilaterally.
<Issues with competition policy toward enhancing financial services that utilize FinTech (published on April 21, 2020)＞• Pointed out that fees for interbank settlement have been fixed for a long period of time, and are set at a level that far exceeds actual
administrative costs.
• With regard to the CAFIS service (Credit And Finance Information Switching system), which is the infrastructure for credit card
payments, pointed out that while cost per transaction is considered to be falling, the pay-per-use fees for each case of data processed has
not been revised for more than 10 years.
• After the publication of this study, interbank remittance fees were reduced from 162 yen (117 yen for amounts below 30,000 yen) to theuniform rate of 62 yen, and CAFIS fees were reduced from the maximum 3.15 yen to 1 yen (in the case of immediate account transfer
transactions).
<Issues with competition policy in the mobile phone market (published on August 2, 2016 and June 28, 2018)>• Pointed out that it is undesirable, from the perspective of competition policy, to lock in users with unreasonably high contract
termination fees, etc. for the early termination of long-term mobile phone contracts.
• Pointed out the risk of problems related to the Antimonopoly Act in cases where there is deemed to be no other rational purpose than totie down users for two years in the so-called "two-year binding contracts," which require them to pay contract termination fees if theyterminate the contract during the two-year contract period.
• After the publication of this study, the system was amended, and the contract termination fee was capped at less than 1,000 yen.

44