Provisional Translation by the Cabinet Office

Emergency Economic Measures forThe Revitalization of the Japanese Economy
January 11th, 2013
Cabinet Decision
Government of Japan

Summary

Key Features of the Measures
This is the first of a series of packages aimed at the “revitalization of the economy”,“post-quake reconstruction” and “crisis management” by adopting a three-pronged strategy
consisting of bold monetary policy, flexible fiscal policy and a growth strategy that
promotes private investment. The implementation of these measures is different from pastmeasures in both its scope and its reach.
The emergency measures are aimed at reversing the long-lasting trend of a shrinking
economy, which has been suffering from the prolonged appreciation of the yen anddeflation, decline in employment and income, increased inequality between generations,pessimism about the future and a sense of stagnation. The measures will reverse thesetrends and realize a strong economy full of hope and wealth, in which innovations and new
businesses are successively generated, driving an increase in employment and income.
In addition to a supplementary budget, regulatory reform, policy-based finance and tax
measures will be used to prevent a double dip of the economy and make a smooth transition
to a strategy for sustained economic growth. The measures will be implemented anddelivered uninterruptedly with a strong sense of urgency in close cooperation among theministries under the leadership of the Headquarters for Economic Revitalization and theCouncil on Economic and Fiscal Policy.

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Concept of the Measures Aimed at Revitalizing the Japanese Economy

Accelerating the efforts for reconstruction of the areas damaged by the Great East
Japan Earthquake and strengthening disaster prevention
 Strengthening the existing system and measures and accelerating the efforts forreconstruction from the perspective of those in the damaged areas
 Strengthening the resilience of the Nation’s infrastructure by addressing aging social
infrastructure intensively and strengthening the basis for industry and livelihood
Flexible management of economic and fiscal policy Eliminating deflationary expectations by showing a strong political willingness andclear commitment to end deflation as soon as possible
 Giving priority to the areas that contribute to sustained growth and have the potential tosupport the future Japanese economy, with a particular emphasis on the measures that
could have an immediate impact on the economy or a large demand creation effect Focusing public investment on the projects that protect citizen’s lives and livelihoods
or contribute to the growth and revitalization of the regions
 Building a framework to strengthen coordination between the government and theBank of Japan. Strongly expecting aggressive monetary easing by the BOJ with a clear
inflation target.
 Monitoring the trends of foreign exchange market carefully and addressing themappropriately
Implementation and realization of the strategy for growth Aiming to build a nation imbued with the concepts of “the most business friendly
country in the world”, “a country where the potential of individuals is fully realized
and employment and income grow”, and “Hybrid-Economy” driven by the twin
engines for growth that consist of “Trade oriented country” and “Industrial investment
oriented country”
 Encouraging business investment and innovation, facilitating the expansion ofJapanese businesses in overseas markets, developing new markets through thesemeasures and increasing jobs, strengthening human capital development and increasing
jobs for the younger generation, and developing an environment where those who havefailed can challenge again
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Provisional Translation by the Cabinet Office Developing the systems for implementing bold regulatory and institutional reform in
the areas that have a potential of high growth

Specific Policies of “Emergency Economic Measures for the Revitalization of theJapanese Economy”

All the available policy measures will be adopted focusing on three priority areas including
1) Post-quake reconstruction and disaster prevention, 2) Creation of wealth through growthand 3) Ensuring a sense of security in daily life and revitalizing regions

I. Measures for Post-quake Reconstruction and Disaster Prevention

1.

Acceleration of the efforts for reconstruction of the areas damaged by the Great
East Japan Earthquake(1) Building and improving the social infrastructure, facilitation of the settlement of residents, etc.
(2) Restoring the industries and creating employment opportunities(3) Promoting swift recovery from the nuclear plant disaster, etc.

2.

Strengthening the resilience of Nation’s infrastructure for better disasterprevention and mitigation and for enhancing disaster response systems, etc.

(1) Rebuilding the infrastructure that protects lives and livelihood (actions to address aging
infrastructure and disaster prevention/mitigation actions)(2) Developing protection measures against disaster to ensure functioning of the key social
infrastructures(3) Promoting disaster prevention measures to improve the quake-resistance of school buildings and toaddress the aging of buildings(4) Strengthening large-scale disaster response systems

II. Creation of Wealth through Growth

1. Stimulating private investment for stronger growth(1) Encouraging business investments for stronger growth and those for promoting energy saving andrenewable energy(2) Promoting R&D and innovations
3Provisional Translation by the Cabinet Office(3) Improving the infrastructures that will help strengthen international competitiveness(4) Resource and oceanic development

2. Measures for small and medium-sized enterprises, small-scale businesses, andmeasures for agriculture, forestry and fishery(1) Measures for small and medium-sized enterprises and small-scale businesses(2) Improving the competitiveness of agriculture, forestry and fishery through aggressive promotion

3. Facilitating the expansion of Japanese businesses in overseas markets
4. Revitalizing financial and capital markets
5. Measures for human capital development and employment

III. Ensuring a Sense of Security in Daily Life and Revitalizing the Regions
1. Ensuring a sense of security in daily life
(1) Building a healthcare system which gives a sense of security(2) Developing systems in education for ensuring the security of students and promoting measures forsupporting parents to raise children(3) Ensuring the safer and better quality of living space and facilitating creation of a recycling society(4) Ensuring a sense of security(5) Supporting recovery from disasters such as typhoons, heavy rain and others

2. Revitalizing regions through making use of local assets(1) Enhancing the dissemination of regions’ attractiveness and promoting tourism(2) Promoting measures to revitalize public transport and other measures that help invigorate regionaleconomies and industries(3) Revitalizing the regional economies through making use of local assets and accelerating theconstruction of resident-friendly communities(4) Promoting regional city renovations and compact cities(5) Supporting local governments’ funding and ensuring the swift implementation of the emergency
economic measures

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Provisional Translation by the Cabinet Office

IV. Regulatory reform to fully harness potential
V. Measures for the stability of the currency market

The Scale and Economic Impact of Emergency Economic Measurers for theRevitalization of the Japanese Economy

Economic impact of fiscal measures (preliminary estimate as of 11 January) Expected impact on real GDP is approximately 2%
 Impact on job creation is approximately 600 thousand (preliminary estimate)
The incorporated measures such as regulatory reform, tax reform, revitalization of financial
and capital markets and the implementation of the growth strategy for promoting
innovation and R&D will lead to economic growth accompanied by stimulated business
investment and consumption, stronger competiveness and an increase in income andemployment
Additional effects are also expected Ensuring the security of citizen’s lives and livelihoods through public investment andother measures for reconstruction in the areas damaged by the Great East Japan
Earthquake, prevention and mitigation against disaster and disaster restoration
 Expanding the growth frontier and increasing value-added of businesses throughstrengthening the basis for future growth and fostering the seeds of growth Generating innovation and strengthening the competitiveness of industries throughpromoting business investment and improving infrastructure Revitalizing the regions through the promotion of tourism, the aggressive promotion ofagriculture, the revitalization of public transport and urban renaissance Together with the expansion of the size of the economic “pie”, increasing jobs andlabor income distribution through taxation and other measures and facilitating thetransfer of assets to the younger generation

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Provisional Translation by the Cabinet Office(Annex)
Financial Size of the Package[Trillion yen (Approximately)]

CentralGovernment
Expenditure

Total Size

I. Measures for post-quake reconstruction anddisaster prevention

3.8

5.5

1. Acceleration of the efforts for reconstruction of theareas damaged by the Great East Japan Earthquake

(1.6)

(1.7)

2. Disaster prevention and mitigation

(2.2)

(3.8)

II. Creation of wealth through growth

3.1

12.3

-Stimulating private investment for stronger growth

(1.8)

(3.2)

-Measures for small and medium-sized enterprises,
small-scale businesses, and measures for
agriculture, forestry and fishery

(0.9)

(8.5)

-Facilitating the expansion of Japanese businesses inoverseas markets

(0.1)

(0.3)

-Measures for human capital development andemployment

(0.3)

(0.3)

III. Ensuring a sense of security in daily life andrevitalizing the regions

3.1

2.1

-Ensuring a sense of security in daily life

(0.8)

(0.9)

-Revitalizing the regions

(0.9)

(1.2)

-Supporting local governments’ funding and ensuring
the swift implementation of the emergency
economic measures(1.4)

Obligatory assurance of national subsidization for a
multiyear construction project

0.3

0.3

Related to economic measures

10.3

20.2

Government’s financial contribution to state pensions
at 50%

2.8

Total amount of supplementary budget

13.1

Note: Central government expenditures include 0.4 trillion yen of fiscal investment and loan
programmes.

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