Summary of the New Economic Measures(provisional translation)

December 2019
Cabinet Office

“Comprehensive Economic Measures to Create a Future with Security and Growth”(Cabinet Decision on December 5, 2019)

Current Conjuncture of the Economy and Basic Concept of the Economic Measures
The economy is recovering at a moderate pace…

− The overall impact caused by consumption tax rate hike in October 2019, at present, is judged smaller than thelast hike (in 2014), partially helped by the already-adopted counteracting measures including reduced rate,
while sales in some sectors declined after the tax hike partially due to the effect of a series of natural disasters.

…however, more attention should be paid to the downside risks originating from overseas economy.

− The Government recognizes that thorough and preemptive policy actions are called for in order to keep the riskmaterialization from negatively affecting domestic private demand.

In addition, a series of natural disasters brought about severe damages in wide areas.
− The damages caused by Typhoon Hagibis etc. are severer compared to those in the last year.

Need to accelerate challenge toward building Society 5.0, besides passive counteracting measuresagainst risks and damages− In addition to ensuring security, it is high time to move forward to establishing a medium- and long-termsustainable growth path mainly led by private demand, beyond the 2020 Tokyo Olympics and Paralympics.
− Thereby, the Government needs to advance and accelerate Abenomics, and ensure the path toward exit fromdeflation and economic revitalization.

…and conducts appropriate policy mix between fiscal policy and monetary policy.

− Whilst the BoJ tenaciously continues strong monetary easing, the Government shall take bold fiscal policy
aiming at overcoming the downside risks and realizing autonomous growth path.
− Timely and thorough actions are to be conducted by newly formulating Supplementary budget for FY2019 andappropriately combining it with Temporal and Special Measures allocated from FY2020 Initial budget, etc.
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Measures to Implement: Three Pillars
I. Restoration and Reconstruction from Natural Disasters and Ensuring Safety and Security
1. Acceleration of Restoration and Reconstruction from Natural Disasters
e.g. Restoration (including improvement) of the damaged infrastructure including rivers, roads and ports
2. Strong Promotion of Disaster Prevention, Mitigation and Building National Resilience(i) Steady Implementation of the Three-Year Emergency Response Plan (from FY2018-2020)(ii) Further Strengthening of National Resilience Projects Focusing on Flood Control Measurese.g. Improving river channels and levees, Preventing measures against flood including developing rainwater storage facility,
Promoting to lay power lines underground, Developing “net zero energy buildings (ZEB),” etc.
3. Securing Public Safety and Security
e.g. Developing shared information platform for disaster management, Promoting renewable energy in natural parks’ facilities
Reference 1. A series of Typhoons brought
about severe damages in 2019

Reference 2. Disaster Prevention, Mitigation andBuilding National Resilience (national expenditure)

FY2018 Second
Supplementary Budget
September 7th-9th
Typhoon 15 (Faxai)
October 12nd-13rd
Typhoon 19 (Hagibis)
October 24th-26th
Typhoon 21 (Bualoi)

FY2019 Initial Budget(Temporal and Special Measures)

3-year Plan

Strengthening

1.1 trillion－1.3 trillion―

FY2019 SupplementaryBudget―

FY2020 Initial Budget

1.1 trillion(Temporal and Special Measures)

Steadily implementing 3 year
emergency response plan

Decided on Dec 20

1.2 trillion

Decided on Dec 13―Mainly focusing on floodcontrol measures

3II. Intensive Support for Those Striving to Overcome Economic Downside Risks
1. Developing an Environment for Enhancing Productivity of SMEs
e.g. Subsidies for investment in ICT and digital technologies, etc. (through continuous, multi-year support)
Supports for capacity building and carrier development of those working at SMEs
2. Facilitation of Overseas Business Operations
e.g. Support for developing new foreign market by SMEs, Creation of a new facility in JBIC for supporting overseas M&A, etc.
3. Making Agriculture, Forestry and Fisheries a Growth Industry and Accelerating Enhancement of Exporting Capacity
e.g. Enhancing production capacity of daily and livestock sector (incl. “wagyu”), Implementation of “smart agriculture” technology,Development of processed food production facilities for export (those introducing HACCP, etc.)
4. Further Promotion of Regional Revitalization
e.g. Grant to local governments for establishing regional revitalization hubs, Strengthening regional finance functions, Promotion ofmatching between local businesses and managerial talents from urban areas
5. Support for the “Employment Ice-Age” Generation
e.g. Establishing specialized contact at public job-placement offices, Encouraging custom-made support for social withdrawals by
local governments, and Formulating 3-year action plan and continuously securing revenues to implement it. Hiring those rom
this generation in government service sector.
Reference 3. Ratio of Companies Undertaking Investment in RPA
40(%)

Reference 4. Major "Employment Ice-age Generation"(age 35-44, total 16.9 million)
Unemplyed, 0.3Exectives, 0.535302520

Self employed,etc. 0.9

RPA investment is estimated to raiselabor productivity by around 25%of which 0.4 million doneither housework norschooling

1510Non-labor force,
2.2 mil

50～2930～499
company size (number of workers)

500～

Others, 0.1

of which 0.5 million involuntarily
work in non-regular status

Non-regularworkers,
3.7 mil(source) Left: Cabinet Office “Annual Report on Japanese Economy and Public Finance for FY2019.” Right: Ministry of Internal Affairs and Communication.

Regularworkers,
9.2 mil4III. Investing for a Future, Maintaining/Enhancing Economic Vitality Beyond the 2020 Tokyo Olympics and Paralympics
1. Promoting Innovation and Social Implementation of Technologies Toward Realizing Society 5.0 and SDGs
e.g. Enhancing “moonshot” type R&D program, Supporting finance for younger researchers in a multi-year scheme, Developing“post-5G” technologies, Accelerating safe and reliable 5G investment, Subsidy for purchasing safe driving supporting autos
e.g. R&D for zero emission technology, Social implementation of innovative materials contributing to energy saving, Promoting
issuance of ESG corporate bonds.
2. Investing in Human Capital for Those Playing Important Roles in Society 5.0 and Creating an Environment Suitable for Child Rearinge.g. Realizing an environment where every pupil/student in compulsory education is equipped with and utilize his/her computer until
FY2023, with developing high-speed and large-capacity communication network (by continuously securing revenues)
3. Infrastructure Development for the Era of 60 Million Inbound Tourists
e.g. Capacity enhancement of capital area airport (via fiscal investment and loan scheme), Conducting strategic/intensive
promotion, and Developing stress-free environment to further attract inbound tourists4. Improvement of Infrastructure to Support Productivity Enhancement
e.g. Development of highways, hub ports, etc. partially through fiscal investment and loan scheme
5. Supporting Private Consumption in a Seamless Mannere.g. Continuing point reward program for cashless payment at small- and medium- size retail stores until June 2020, and Initiatinga new point granting program using the Social security and Tax Number Card (“Individual Number Card”) from September 2020.
6. Promotion of Corporate Governance Reform, etc.
Reference 5. Developing “Post 5G” Technologies

Current 5G
enhanced MobileBroadband

Reference 6. Human Capital Investment (Providing Computers to Students)(number of student per computer)1
2

newly set target(1 student per computer forcompulsory education)

34
5

Post 5G
massive Machine TypeCommunications

e.g. smart manufacturing

5.4

6

Ultra-reliable Low
Latency Communications

e.g. connected car

78

6.5

original target(3 student per computerfor elementary andsecondary education)2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
（FY）

(source) Ministry of Education, Sports, Culture, Science and Technology

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Size

(Approx., trillion yen)

I.

II.

III.

TotalFiscal Expenses

5.8

3.1

4.3

13.2

of which Central and Local Governments

5.4

2.1

1.9

9.4

of which Fiscal Investment and loan

0.3

1.1

2.4

3.8

Central Government 7.6
General account
6.2-FY19 Supplementary budget
4.3-FY20 Temporal and special measures 1.8
Special accounts
1.5

Total Size (incl. expenses by private sector)

7.0

7.3

11.7

26.0

Local Governments

1.8

Economic Impact
 Government Expenses in this Economic Measure are expected to directly boost
real GDP amount (demand) by approximately 1.4%.
•The effect is presumed to realize by around FY2021

 Growth-enhancing Infrastructure development (not included above) is estimatedto promote domestic investment equivalent to 0.7% of GDP.

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