Provisionaltranslation

Action Plan of the Growth Strategy

June 18, 2021

Action Plan of the Growth Strategy(Table of Contents)

Introduction ................................................................................................................ 1
Chapter 1: Approaches to a Growth Strategy for a New Normal Lifestyle ............. 1

1. Lifting labor productivity and the labor participation rate and raising wages to realize avirtuous cycle of growth and distribution..................................................................... 1
2. Increasing the markup rate of Japanese companies by creating new products andservices with high added value ..................................................................................... 2
3. Realizing a society in which people can experience well-being ...................................... 3
4. Support for business continuity and business restructuring in areas affected by the
COVID-19 pandemic.................................................................................................... 3
5. Strengthening proactive growth strategies in areas with potential ................................... 6

Chapter 2: Concentrated Investment and Implementation of Digitalization as a
New Growth Driver and its Environment .................................................. 6

1. Promotion of digitization with a focus on the Digital Agency ......................................... 6
2. Early nationwide deployment of 5G, promotion of post-5G, and promotion of so-called
6G (Beyond 5G) ........................................................................................................... 8
3. Lowering of mobile phone rates ....................................................................................... 8
4. Enforcing the Act on Improvement of Transparency and Fairness in Trading on
Specified Digital Platforms and developing rules to make the digital advertisingmarket more transparent and fairer............................................................................... 8
5. Revisiting regulations in light of digital technology ........................................................ 8
6. Use of new digital technologies such as blockchain ........................................................ 9
7. Smart agriculture, forestry, and fisheries.......................................................................... 9

Chapter 3: Growth of the Green Sector................................................................... 10

1. Green Growth Strategy towards Carbon Neutral in 2050 .............................................. 10
2. Carbon pricing ................................................................................................................ 19
3. Attracting domestic and foreign private capital to carbon-neutral markets ................... 20
4. Regional decarbonization roadmap ................................................................................ 22

Chapter 4: Realizing New Investments for Green Growth Strategies ................... 23

1. Industrial structural transformation associated with carbon neutrality .......................... 24
2. Electrification and the use of digital technology in conjunction with carbon neutrality 24
3. Development of hydrogen stations ................................................................................. 24
4. Development of quick charging facilities for electric vehicles ...................................... 24
5. Gas conversion of coal-fired private power generation, etc. .......................................... 25
6. Development of transmission line networks to promote renewable energy ................... 25

Chapter 5: Strengthening Investment in People ..................................................... 25

1. The state of the freelance protection system .................................................................. 25
2. Initiatives to establish telework ...................................................................................... 25
3. Realization of new ways of working, such as lifting the ban on second and side jobs andpromoting the introduction of short-time working regular employees ...................... 26

4. Promoting diversity, including the appointment of women, non-Japanese, and midcareer hires.................................................................................................................. 26
5. Stabilizing the employment environment for the younger generation by reviewing thepersonnel evaluation system ....................................................................................... 26
6. Facilitating labor mobility .............................................................................................. 26
7. Enhancing individualized and collaborative learning by promoting the Giga School
concept ........................................................................................................................ 28
8. Implementation of the Policy for Reform of Social Security for All Generations ......... 28

Chapter 6: Ensuring Economic Security and Concentrated Investment .............. 28

1. Promoting economic security policy .............................................................................. 28
2. Development of advanced semiconductor technologies and promotion of manufacturinglocations ...................................................................................................................... 34
3. Promoting optimal deployment of next-generation data centers .................................... 37
4. Development of next-generation battery technologies and promotion of manufacturinglocations ...................................................................................................................... 38
5. Supply chain of key technologies and commodities such as rare earths ........................ 38
6. Strengthening manufacturing infrastructure ................................................................... 39

Chapter 7: Reviving the Dynamism of Japanese Firms in a “With COVID-19”
and a “Post COVID-19” World: Creating an Environment that Both
Creates and Scales Up Startups ............................................................... 39

1. Reform of IPO pricing process ....................................................................................... 41
2. Consideration of introducing regulations to allow the listings of SPACs ..................... 43
3. Improvement of regulation to revitalize private placement financing ........................... 45
4. Promoting competition policy to optimize transactions between startups and large
companies ................................................................................................................... 46
5. Comprehensive support for the formation of startup ecosystems .................................. 46

Chapter 8: Creating an Environment for Business Restructuring andRevitalization ............................................................................................. 46

1. Improving the environment for business restructuring and revitalization of large andmedium-sized companies ........................................................................................... 47
2. Improving the environment for business restructuring and revitalization of SMEs....... 47
3. Recovery of corporate profitability ................................................................................ 48

Chapter 9: Competition Policy and Other Measures for New Growth .................. 48

1. Promoting regulatory reform .......................................................................................... 48
2. Redesigning competition policy ..................................................................................... 48

Chapter 10: Building Strong SMEs......................................................................... 49

1. Support for business continuity and business restructuring of SMEs ............................ 49
2. Increasing labor productivity through the growth of SMEs ........................................... 49
3. Appropriate transactions between large companies and SMEs ...................................... 50
4. Support for local SMEs and small businesses, etc. ........................................................ 50
5. Enhancement of management support through public-private cooperation ................... 51

Chapter 11: Strengthening Investment in Innovation ............................................ 51

1. Promoting reverse innovation......................................................................................... 51

2. Promoting the integration of the humanities and sciences ............................................. 51
3. Accelerating R&D of cutting-edge technologies such as quantum technologies ........... 51
4. University reform through the creation of the University Fund, etc. ............................. 52
5. Promoting intellectual property strategy ........................................................................ 52
6. The 2025 World Exposition in Japan as a testing ground for society of the future ....... 52
7. Creating new industries in Fukushima ........................................................................... 52

Chapter 12: Corporate Governance Reform ........................................................... 53
Chapter 13 Initiatives in Important Fields .............................................................. 53

1. Development and production of vaccines in Japan ........................................................ 53
2. Growth strategies for the pharmaceutical industry ......................................................... 54
3. Oceans ............................................................................................................................ 56
4. Space ............................................................................................................................... 56
5. Strengthening promotion of PPP/PFI ............................................................................. 57
6. Realizing an International Financial Center ................................................................... 57
7. Promoting direct investment in Japan ............................................................................ 58
8. Institutional reform in individual fields .......................................................................... 58

Chapter 14: Regional Development......................................................................... 60

1. Realizing a tourism-oriented country ............................................................................. 60
2. Realizing vibrant farming, mountainous and fishing villages through the development ofgrowth industries in agriculture, forestry and fisheries .............................................. 60
3. Strengthening the foundations of regional financial institutions .................................... 61
4. Promoting the matching of management personnel for local companies ....................... 61
5. Expanding the flow of people from urban areas to rural areas by promoting teleworkand other measures that contribute to regional development ..................................... 62
6. Revitalizing local public transportation .......................................................................... 62
7. Promoting the Super City concept, etc. .......................................................................... 62
8. Securing human resources for community development ............................................... 62
9. Land policy ..................................................................................................................... 63

Chapter 15: Realizing a Vibrant Japanese Economy in a New Environment of
Global Competition ................................................................................... 63

1. Leading the international economic system based on free and fair rules ....................... 63
2. Expanding cooperation with like-minded countries that share our fundamental values 64

Chapter 16: Follow-up ............................................................................................. 64

Introduction
The Growth Strategy Council compiled an interim report in December 2020. This Action
Plan of the Growth Strategy will be approved by the Cabinet based on the deliberations of theCouncil on Economic and Fiscal Policy, the Growth Strategy Council, and the ruling party. In
formulating this report, the main policy items were compiled based on the opinions of experts
at the Growth Strategy Council and the recommendations of the ruling party, under the broad
direction of the “Basic Policy on Economic and Fiscal Management and Reform 2021 (Basic
Policy).”Going forward, this action plan will be carried out with determination.

Chapter 1: Approaches to a Growth Strategy for a New Normal Lifestyle
1. Lifting labor productivity and the labor participation rate and raising wages to realize
a virtuous cycle of growth and distribution
The economic growth rate 1 is the sum of the growth rate in the “labor participation rate” 2
and the growth rate in “labor productivity.” 3Japan’s economic growth rate in the 2010s, from 2010 to 2019, was 1.1%/year, the fourthhighest among the G7 countries, after the United States (1.5%/year), Germany (1.3%/year),and the United Kingdom (1.2%/year).
Breaking this down, Japan’s growth rate in the labor participation rate is 0.8%/year, whichis the highest among the G7 countries. This is due to the expansion of employment for womenand the elderly in the 2010s. Japan’s labor participation rate, as an absolute value, is 53.2%,
the highest among the G7 countries.
The problem is labor productivity. Japan’s growth rate for labor productivity is 0.3%/year,
which is the second lowest among the G7 countries after Italy, and Japan’s labor productivity,
as an absolute value, is USD 75,000, the lowest among the G7 countries.
In order to increase the economic growth rate, it is necessary to increase the labor
participation rate and labor productivity. In particular, increases in labor productivity areclosely related to increases in workers’ real wages, and improvements in this area are necessary
in order to raise real wages. The key to this is innovation.
By increasing labor productivity through growth strategies and distributing the results in the1

GDP growth rate per capita.

2 The number of workers divided by the population.
3 GDP divided by the number of workers.

1form of wages to working people and improving the labor participation rate, the income levelof working people will be continuously increased. In this way, we will achieve growth throughdemand expansion, and realize a virtuous cycle of growth and distribution.
2. Increasing the markup rate of Japanese companies by creating new products andservices with high added value
When we talk about improving labor productivity, we tend to focus on cost. Yet since laborproductivity is based on selling price, cost, even if selling price is low, productivity will be
low.
Looking at the markup rate, 4 which indicates how many times the production cost is being
sold at a given price, Japan’s rate is only 1.3 times, the lowest among the G7 countries (Figure1).
In addition, the markup rates of U.S. and European companies have rapidly increased since2010, while those of Japanese companies have remained at low levels since fiscal 2010 (Figure
2).
Furthermore, according to the OECD, the percentage of companies that has introduced new
products and services is the lowest in Japan among developed countries (Figure 3).
Thus, Japanese companies have not been able to create new products and services, and havenot been able to secure sufficient selling prices. It is necessary to reform the business structure
in order to utilize AI and big data and strengthen brand power. The goal is to have Japanesecompanies create new products and services with high added value, and create added valuethat can secure high selling prices thereby increasing labor productivity.
Figure 1: International comparison of
markup rates (2016)

Figure 2: Trends in the corporate markup
rates of developed countries

4
A fraction in which the denominator is the cost (marginal cost) and the numerator is the selling price. When this value is 1,
the selling price is just generating enough to cover the cost.

2

Figure 3: Percentage of companies that have introduced
new products and services (2012-2014)

3. Realizing a society in which people can experience well-being
Through the expansion of a virtuous cycle of growth and distribution based on the growthstrategy, we aim to realize a society in which each and every citizen can experience well-being
as a result, while correcting disparities.
4. Support for business continuity and business restructuring in areas affected by the
COVID-19 pandemic
Unlike past economic crises, the COVID-19 pandemic has not had a uniform impact on allindustries, and while some companies have been adversely affected, others have increased
their profits.
Looking at the changes in profit margins of listed companies in Japan, the United States,
and Europe, there is a symmetry between companies that are deteriorating and those that are
improving in Japan, the United States, and Europe. The percentage of companies that increased
their profit margin by 5% or more was 14.2% in Japan, 19.0% in the United States, and 23.8%
in Europe. On the other hand, 10.7% of companies in Japan, 19.7% in the United States, and24.8% in Europe saw their profit margins decrease by 5% or more (Figure 4).

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Figure 4: Distribution of changes in the ratio of operating profit to net sales oflisted companies in Japan, the U.S., and Europe(change from same period prior year, October-December 2020)

According to Japanese credit card purchase data, it can be confirmed that there has been alarge decline in consumption expenditure in the service sector in Japan, especially inaccommodation, food service, and movie theaters, sports facilities, and amusement parks(Figure 5).
Figure 5: Trends in Japan’s retail and service sector consumption expenditures(compared to the corresponding period in 2019)

Looking at the rate of change in the number of employees from March 2020 to March 2021,
non-regular employment has declined significantly in accommodation (-23.3%), lifestylerelated and entertainment (-11.9%), and food service (-10.8%) (Figure 6).
Furthermore, while the number of regular employees has been increasing year-on-year evenin the COVID-19 pandemic, the number of non-regular employees has been decreasing year-4

on-year, with women being particularly adversely affected (Figure 7).
As a result, between March 2020 and March 2021, regular employment increased by
540,000, while non-regular employment decreased by 960,000; consequently, total
employment decreased by 420,000.
Figure 6: Percentage change in employment by industry (March 2021,
compared to the same month in the prior year)

Figure 7: Trend in the number of employees (YoY change)

As mentioned above, industries such as food service, accommodation, and culture, arts, andentertainment have been severely affected by the COVID-19 pandemic. We will support thecontinuation of these businesses, as well as new initiatives and business restructuring for the“Post COVID-19” era.
5. Strengthening proactive growth strategies in areas with potential

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On the other hand, we will pursue an aggressive growth strategy for the future in areas withgrowth potential, such as digital and green, which are still driving the economy in the COVID19 pandemic.
This will encourage bold investment and innovation by the private sector and lead to a shift
in socioeconomic structure to meet the needs of the post-COVID-19 era, with the aim ofrealizing Society 5.0.

Chapter 2: Concentrated Investment and Implementation of Digitalization asa New Growth Driver and its Environmental Arrangement
1. Promotion of digitization with a focus on the Digital Agency
We will boldly promote future-oriented digital transformation (DX) as a driving force for
growth, and strengthen professional human resources to deliver the benefits of digitalization
to all citizens.
To this end, the Digital Agency will play a central role in creating an environment in which
national and local governments, the quasi-public sector, and the private sector can create
services that ensure user-friendly design, content, etc., from a thoroughly public perspective.
（(1) Promotion of digital government from the people’s perspective•

Promote fundamental improvements to Mynaportal and other systems.

•

Standardize and unify the design, content, etc. of the websites of each government
ministry and agency.

•

Establish a system to allocate the budget related to the information system to theDigital Agency in a phased manner, and to allocate the budget after examining
whether it aligns with the basic policy on the development and management of
information systems.

•

Introduce the latest technology and agile development (a method of rapid
development through repeated design and testing) in the maintenance and operationof information systems.

(2) Development of a common infrastructure for a digital society•

Aim to have My Number Cards available to almost all citizens by the end of next
fiscal year.

6•

Develop a common infrastructure for the public and private sectors, such as agovernment cloud.

•Promote the unification and standardization of local government information
systems, including the aim of standardizing local government core business systems
by FY2025.

•

Develop a base registry of basic social data held by government agencies. The
location environment of the data centers established by each government ministry
and agency will be optimized in stages.

•

Rapidly collect real-time socioeconomic data on infectious diseases, etc., to improveanalysis capabilities and promote fine-tuned policy planning.

(3) Promotion of comprehensive data strategy and development of common
infrastructure in the quasi-public sector, etc.
•

Promote a comprehensive data strategy, including the concretization of rules topromote data distribution and the development of a system for data transactions.

•

Consider establishing a program to support the development of data standards anddata collaboration infrastructure in quasi-public sectors such as healthcare,education, and disaster prevention.

(4) Development of digital human resources
From the next fiscal year onward, we will promote the recruitment and development ofdigital human resources in administrative agencies by actively recruiting candidates who havepassed the new “digital” examination division of the National Public Employee Recruitment
Examination for Comprehensive Service. We will create an environment where talented
people can develop their careers while moving back and forth between the private sector, local
government, and the central government.
We will also promote the development and utilization of digital human resources in theprivate sector. In order to share the vision of the digital human resources required by society
as a whole, and to develop and secure human resources, a digital human resources platform
will be established in cooperation with the business community and educational institutions todevelop educational content and curricula, provide practical learning opportunities, andcollaborate with private sector digital human resources development efforts in local areas.
Furthermore, we will develop a system that includes cooperation with the business community

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and create criteria to evaluate the skills of various digital human resources.
To promote the digitization of local governments, we will develop and secure digital humanresources, including the sharing of human resources among local governments.
2. Early nationwide deployment of 5G, promotion of post-5G, and promotion of so-called
6G (Beyond 5G)
We will promote the early and intensive deployment of a safe and secure 5G infrastructure.
We will also promote the research and development of 5G (including post-5G) and 6G(Beyond 5G) technologies with enhanced features for numerous connectivity and ultra-low
latency, which are necessary for further expansion into industrial applications.
3. Lowering of mobile phone rates
We will strengthen the provision of information and improve the environment to help users
understand and make rational choices, work on lowering switching barriers, and promote theimprovement of the competitive environment, including the optimization of transactions
between businesses.
4. Enforcing the Act on Improvement of Transparency and Fairness in Trading on
Specified Digital Platforms and developing rules to make the digital advertisingmarket more transparent and fairer
We will steadily enforce the Digital Platform Transaction Transparency Act. In addition,
the government will promote the development of rules for transparency and fairness by adding
the digital advertising market to the scope of the law.
We will conduct a competition assessment of the impact of platform providers that supply
operating systems (OS) for smartphones and other devices on the competitive environment in
the digital market, paying close attention to trends in Europe and the United States
5. Revisiting regulations in light of digital technology
In the fields of mobility, finance, and construction, the regulatory system will be reformed
so that it is suitable for the era of the Fourth Industrial Revolution, using AI and other digitaltechnologies. Based on the results of demonstration projects, specific institutional reforms will
be compiled.

(1) Mobility field

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The system will be revised by the end of this year to make it possible to use AI, etc. toreplace inspections conducted by inspectors for inspection items that can be considered forinspection using AI, etc. in the completion inspection of automobiles.
(2) Finance field
Regarding regulations for financial instruments sales to elderly customers, the government
will work on to reach a conclusion of regulatory reform that realize flexible financial services,
including the use of AI, etc., to elderly customers depending on their capabilities in investment
and their circumstances by the end of this fiscal year
(3) Construction field
Verification of the remaining issues regarding drones equipped with infrared devices tosurvey exterior walls will be conducted this fiscal year. After confirming that the accuracy isequivalent to or higher than that of a percussion survey by qualified persons such as a 1stClass Kenchikushi, the system will be revised to allow its use in exterior wall surveys inperiodic inspections of buildings from the next fiscal year.
6. Use of new digital technologies such as blockchain
We will study ways to use new digital technologies such as blockchain to improve theefficiency of supply chains and to link IDs (identification) between various public and private
services. We will also develop the business environment for non-fungible tokens (NFTs) andsecurity tokens.
7. Smart agriculture, forestry and fisheries
To promote the growth of the agriculture, forestry, and fisheries industries, which are at thecore of regional development, through the use of digital technology and satellite information,
we will promote the development of the communications environment and the training ofdigital human resources.
Specifically, in order to promote the development of the communication environment,
guidelines will be formulated by the end of this fiscal year that outline R&D methods in rural
areas. To strengthen the development of digital human resources, we will promote the use of
external human resources in the field of education. In promoting smart agriculture, forestry,
and fisheries projects, we will also encourage the formation of consortiums in which many
people from different fields, including local universities and financial institutions, can9participate. Furthermore, we will encourage the entry into the region of businesses that provide
support services such as rental and sharing of equipment necessary for smart agriculture,
forestry, and fisheries.

Chapter 3: Growth of the Green Sector
1. Green Growth Strategy Through Achieving Carbon Neutrality in 2050
(1) Framework for a Green Growth Strategy based on the 2030 emission reduction
targetIn an effort to decarbonize, companies are increasingly selecting their supply chain partners
on a global scale, and we are entering an era in which responding to global warming will
determine the success or failure of growth. We need to maximize the introduction of renewableenergy. In order to achieve the high goal of carbon neutrality in 2050, the Green Growth
Strategy will be implemented as follows. In doing so, the benefits to each citizen on the
demand side, should be communicated in an easy-to-understand manner. We will also consider
measures to encourage further necessary investment with a view to the 2030 emission
reduction target. In addition, we will continuously follow up on the progress of the strategy
and review its contents and areas.
(2) Key cross-sectoral policy tools① BudgetGovernment establishes a 2 trillion yen fund which will encourage innovation throughcontinuous support of challenging R&D activities by companies and other organizations overa 10-year period.
② Tax Systems

The Investment Promotion Tax System will promote investment in production equipment

for products with high decarbonization potential and equipment which promotedecarbonization of production processes, etc.
③ Regulatory reform and standardization

We will overhaul regulations to induce green investment. In addition, we will tighten

regulations to create technology demand, relax outdated regulations that do not cover new

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technology, and work on international standardization that makes it easier for new
technologies to be used around the world.
④ International cooperation

The goal is to strengthen the competitiveness of domestic industry by capturing not only thedomestic market but also overseas markets such as emerging countries and reducing costs by
taking advantage of economies of scale. In addition, through direct investment and M&A, wewill bring in foreign capital, technology, sales channels, and management.
(3) Issues and responses by sector①Offshore wind, next-generation solar, and geothermal industries

Since offshore wind power generation has the anticipated economic ripple effects, thegovernment and the Industry will develop a competitive and resilient supply chain bycreating
an attractive domestic wind power market to attract domestic and foreign investment. In
addition, the government and the Industry will engage in next-generation technology

development and international cooperation with an eye to expanding into Asia, and createnext-generation industries that can compete on the global stage.
Specifically, the government will continue to award capacity of 10GW by 2030 and 3045GW, including floating offshore wind, by 2040.
The government will thoroughly support the development of next-generation solar cells andaccelerate

researchanddevelopmentfor

performance

improvement

toachievecommercialization in 2030. It will develop new markets such as building walls with technicalrestrictions using existing photovoltaic modules.
Since geothermal power generation is expected to provide a renewable energy source thatcan serve as a base load power source, we will work to significantly expand its introduction
through the supply of risk money, review of the operation of regulations under related laws
and regulations, and technological development.
② Hydrogen and fuel ammonia industry

Hydrogen is a key carbon-neutral technology that is widely used in power generation,industry, and transportation. By positioning hydrogen as a new resource and involving a wide
range of players in addition to automotive applications, we aim to introduce a maximum of 3
million tons by 2030 and expand supply to around 20 million tons by 2050. The goal is to
reduce the cost of hydrogen power generation to a level that is sufficiently competitive with11

fossil fuels in 2050, i.e., to reduce the cost of hydrogen power generation to less than that ofgas-fired power generation (hydrogen cost: less than about 20 yen/Nm3).
Ammonia, which does not emit CO2 when burned, is an effective fuel for co-firing inthermal power plants. The goal is to establish co-firing technology early to expand to Southeast
Asia and other regions, and quickly establish an international supply chain.
③ Automobile and battery industries

In the automotive sector, comprehensive support measures will be implemented to promoteelectrification, together with energy decarbonization, with the aim of making the entire supply
chain carbon neutral. In addition to promoting the introduction of electric vehicles, fuel cellvehicles, etc., by 2030 at the latest, electrified vehicles will be as economical and convenient
as gasoline-powered vehicles through the development of next-generation battery technologies
and the promotion of manufacturing facilities as described below, the development ofhydrogen stations, and the development of quick charging facilities for electric vehicles.
④ Industry and material industry related to Carbon Recycling

Carbon Recycling is a technology that effectively utilizes CO2 as a resource, and is an

important cross-cutting field for the realization of a carbon-neutral society. Japan has acompetitive edge in Carbon Recycling and aims to expand globally after cost reduction andsocial implementation.
Specifically, CO2 absorption type concrete will be priced at the same level as existing
concrete (=30 yen/kg) in 2030 through increased demand, and the new product with rustprevention performance will be available for architectural applications in 2050. Technology
development and demonstration of synthetic fuels made from CO2 and hydrogen for use intransportation equipment, etc. will be conducted intensively over the next 10 years, with theaim of achieving commercialization by 2040.
The material industry will lead the world in the development and supply of zero-carbon steel
technologies, such as the blast furnace steelmaking method using hydrogen, with the aim ofcapturing the green steel market, which is expected to reach a maximum of 500 million tons
per year, or about 40 trillion yen, by 2050.
⑤ Housing and Building Industry, Next Generation Power Management Industry

Housing and buildings are areas that have a significant impact on reducing energy

consumption in the consumer sector. While creating a market environment to spread advanced

12technologies domestically, we also expect to expand our technologies overseas.
Specifically, to strengthen energy efficiency and conservation measures, including
regulatory measures, we will develop a roadmap and take other concrete steps to improveenergy efficiency and conservation performance by reviewing standards for energy
consumption performance of houses and buildings, certification standards for long-life quality
housing and the housing performance indication system, and extending the service life ofhouses and buildings.
In order to eliminate congestion in the electric power system caused by the massive
introduction of renewable energy sources, we will build a next-generation power grid that canperform more advanced grid operations by utilizing digital technology. In addition, digitaltechnology will be used to promote businesses that provide services for optimizing the supply
and demand of electricity by combining highly variable renewable energy sources such as
solar and wind power with storage batteries, etc.
⑥ Next generation heat energy industry

Methane synthesized from hydrogen derived from renewable energy sources, etc., and CO2

can replace natural gas using existing infrastructure such as city gas pipes, and is therefore a
key to decarbonizing the gas needed for heat demand.
Regarding synthetic methane, we will continue to develop the technology and aim to start
using it by 2030. By 2050, the goal is to use 90% of synthetic methane in the existing gas
supply infrastructure, and to achieve decarbonization of gas in combination with direct use ofhydrogen and other means.
⑦Nuclear industry

Nuclear power is a decarbonization option that is in the practical stage. While lowering thedependence on nuclear energy to the extent possible, we will make steady progress in restarting
nuclear power plants in Japan with the highest priority on safety. At the same time, Japanesecompanies with advanced manufacturing capabilities will participate in the development of
next-generation innovative nuclear reactors in the United States, the United Kingdom, andother countries to accelerate innovation in various nuclear technologies. We will promote
R&D, human resource development, etc. for the future, including the pursuit of reactors withsuperior safety, etc.
Specifically, by 2030, small modular reactor technology will be demonstrated through13

international collaboration and component technologies related to hydrogen production for
high-temperature gas-cooled reactor will be established, as well as R&D of nuclear fusion will
be steadily promoted.
⑧ Semiconductor and information and communication industry
Carbon neutrality will be achieved by a society that is electrified and digitalized in all areas,
including manufacturing, services, transportation, and infrastructure. Therefore, the two
approaches of (1) improving the efficiency of energy demand through digitization and (2)energy saving and greening of digital devices and information and communication itself will
be promoted as two wheels of the same cart. The goal is to make all new data centers 30%
energy-efficient by 2030, to convert a portion of the electricity used at domestic data centersto renewable energy, and to make the semiconductor and telecommunications industries
carbon neutral by 2040.
⑨ Ship industry
For zero-emission ships using alternative fuels such as hydrogen and ammonia, we will
promote technological development and start demonstration projects by 2025, aiming toachieve commercial operation ahead of the previous target of 2028, and to further popularize
the technology by 2030.
⑩ Logistics, people flow, and civil engineering infrastructure industries

We aim to achieve carbon neutrality in 2050 in the logistics, people flow, and civilengineering infrastructure industries by making comprehensive efforts to form Carbon-Neutral
Ports for hydrogen import, etc., to introduce smart transportation, to promote the introductionof bicycle transportation, to promote green logistics, to make transportation networks, bases,
and transportation more efficient and low-carbon, to achieve zero emissions in infrastructure
and urban spaces, and to achieve carbon neutrality in construction.
⑪ Food, agriculture, forestry and fisheries

Based on the Strategy for Sustainable Food Systems, called MeaDRI (Measures forachievement of Decarbonization and Resilience with Innovation), we will promote thedevelopment and implementation of innovative technologies and production systems
throughout the supply chain, from production, processing and distribution to consumption,

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with the aim of achieving zero CO2 emissions from fossil fuel combustion in agriculture,
forestry and fisheries sectors by 2050.
Specifically, the government will strongly promote the electrification and hydrogenation ofagricultural and forestry machinery and fishing vessels, the reduction of greenhouse gases
from agriculture and livestock sectors, enhancement of carbon storage in farmlands and sea
areas for long-term and, large-scale, and the reduction of food loss and waste.
In addition, in order to enhance the CO2 absorption and storage functions of forests andlumber, we will promote using wood for construction of buildings s, including theestablishment of technology to construct high-rise wooden buildings, while also working to
rejuvenate forests through thinning and reforestation using seedlings with excellent growth.
⑫ Aviation industry
While the International Civil Aviation Organization (ICAO) has decided not to increase
CO2 emissions compared to 2020, we aim to establish the technological superiority of Japan’s
aircraft manufacturing industry in such areas as electrification and hybrid electrification,
alternative fuels such as hydrogen, and carbon fiber composite materials for airframes.
Specifically, the goal is to expand electrification technology after 2030, in line with thetiming of the market introduction of future aircraft, and to establish the core technology
necessary for hydrogen aircraft, etc. after 2035.
⑬ Resource circulation industries

Regarding the “reduce, reuse, recycle, and renewable” of waste, the technology

development and social implementation are being encouraged through the development oflaws and plans. Technologies such as waste power generation, heat utilization, and biogas
utilization have already entered the commercial phase and are becoming more widespread andsophisticated. In the future, these efforts will be further promoted by upgrading technology,
improving facilities, and reducing costs. While promoting the transition to a circular economy,
we will reduce overall greenhouse gas emissions to zero by 2050.
⑭ Lifestyle-related industries
We will promote total management of housing and transportation by implementing a
combination of ZEH (Net Zero Energy House), ZEB (Net Zero Energy Building), home
appliances, hot water supply and other equipment, and electric vehicles as moving storage

15

batteries. We will encourage behavior change through nudging and sharing, and technologicaldevelopment and demonstration, etc. to verify the effects of CO2 reduction.
2. Carbon pricing
Japan will, without hesitation, tackle economic instruments such as carbon pricing, that use
market mechanisms and are conducive to growth, so as to strengthen industrial
competitiveness and promote innovation and investment.
In light of accelerated expansion of voluntary credit markets internationally, we will takeconcrete measures to increase the depth of the domestic market (credit market) in Japan inwhich carbon reduction value can be traded, and thereby promptly respond to the desires ofcompanies that are pioneering climate change measures.
Specifically, in light of the growing corporate demand for credits with carbon reduction
value, such as J-Credits and Non-fossil Fuel Energy Certificates, at first we will review theexisting credits mechanisms and promote voluntary and market-based carbon pricing.
Furthermore, in terms of carbon taxes and emissions trading systems, we will advanceprofessional and technical discussions on whether it is possible to design a system that will
promote investment and contribute to growth in terms of both price signaling and revenue
generation, while taking into account the added cost borne by companies. In doing so, we willbuild upon international trends and domestic circumstance, including current economic
situation and the availability of alternative means, efforts of leading local governments, andpossible impact on the international competitiveness of domestic industries.
In addition, Japan will fully take the lead in creating fair international rules that strike abalance between free trade and climate change policies, while demonstrating its leadership asa standard-bearer for free trade. On this occasion, we will organize Japan’s basic approach tocarbon border adjustment mechanism, and then respond strategically to such mechanisms bypaying attention to the trends of discussions in the EU and other countries.
3. Attracting domestic and foreign private capital to carbon-neutral markets(1) Development of infrastructure for smooth provision of funds
Our goal is to attract domestic and foreign ESG investment funds worth more than 30
00trillion dollars. The government will formulate guidelines necessary to develop sustainablefinance.
The government will formulate sector-specific roadmaps for the transition in industries withlarge CO2 emissions such as steel, chemicals, paper/pulp, cement, electric power, gas,16

petroleum, etc., and promote transition efforts in Asia.
The government will encourage disclosure of investment strategy by corporate pension
funds and other institutional investors through promoting acceptance of the Japan’s
Stewardship Code, signatories to the Principles for Responsible Investment (PRI) anddisclosures following the recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD).
(2) Development of ESG-related bonds market
Our goal is to develop a “Green International Financial Center” where ESG-related bonds
including green bonds are actively traded. We aim to develop a platform for practicalinformation of ESG-related bonds. The government will encourage the development of theprivate sector mechanism which provides certification of the eligibility of ESG-related bonds,
and the development of ESG rating and data providers.
(3) Enhancement of sustainability-related disclosure
Through the Corporate Governance Code, etc., companies listed in the Prime Market (wherecompanies with a high level of market capitalization and a high quality of corporate
governance will be listed after the transition to TSE new market segments in next April) will
be required to enhance the quality and quantity of climate-related disclosure based on TCFD
recommendations or equivalent international frameworks. Additionally, Japan will
strategically participate in the formulation of global sustainability standards.
(4) Support for lenders by financial institutions and public-private cooperation
The government will encourage active dialogue between financial institutions andbusinesses, and investment and lending based on the dialogue. In order to encourage financial
institutions to develop risk management systems for climate change, the government will
formulate supervisory guidance by the end of this fiscal year, and support regional financial
institutions efforts.
4. Regional decarbonization roadmap
Based on the Regional Decarbonization Roadmap, we aim to achieve decarbonization ofelectricity consumption in the consumer sector by 2030 in at least 100 decarbonization leading
areas. In addition, priority measures will be implemented nationwide to achieve
decarbonization domino effect with leading areas as the core. In particular, we will concentrate17

our efforts on the following items over the next five years.
(1) Continuous and comprehensive support for local initiatives•

Establish a scheme to provide continuous and comprehensive support for regional
decarbonization efforts, including those in leading areas, in order to dispatch andtrain personnel, share information and technology, and secure necessary funding.

(2) Lifestyle innovation•

Develop visualization of CO2 emissions from products and services, incentives toencourage active selection of decarbonized products and services, use of local
renewable energy as a homecoming gift for hometown tax payments, social
implementation of nudges, and a national movement using ambassadors.

(3) Innovation in rules for decarbonization•

Establish a renewable energy promotion zone that contributes to environmental
conservation and smooth regional consensus building, as well as to the foreseeabilityof businesses, and promote renewable energy such as solar power generation thatcoexists with and contributes to local communities. Consideration of the
optimization of environmental assessments to promote wind power generation, etc.,
and institutional measures to accelerate the development of geothermal power
generation in symbiosis with local communities through the implementation ofscientific research.

Chapter 4: Realizing New Investments for Green Growth Strategies
1. Industrial structural transformation associated with carbon neutrality
We will support the industrial structural transformation associated with carbon neutrality in
2050. For example, engine parts suppliers will be challenged to manufacture electric parts inline with the shift to electrification of automobiles, and gas stations and maintenance bases
will be transformed into new regional human flow, logistics, service bases, and EV stations.
At the same time, we will support the movement of labor, without the loss of employment,
associated with industrial structural transformation.
2. Electrification and the use of digital technology in conjunction with carbon neutrality

18

Electrified society is a prerequisite for carbon neutrality. For example, digital control ofpower networks is important to maximize the introduction of renewable energy. Cars, drones,
airplanes, trains, and their automated driving are digitally controlled. Robots will support theworkplace in both manufacturing and service. The Green Growth Strategy will be supported
by a robust digital infrastructure, and green and digital are two wheels of the same cart. We
will promote efficient and effective greening through digitization in environment-related fields.
We will lead the world’s green industry and create a virtuous cycle between the economy andthe environment.
3. Development of hydrogen stations
In anticipation of the widespread use of fuel cell vehicles, fuel cell buses, and fuel cell trucks,
about 1,000 hydrogen stations will be constructed by 2030, taking into account human flows
and logistics in order to achieve the optimal layout. We will promote the development ofhydrogen stations for commercial vehicles such as buses and trucks, including refuelingfacilities exclusively for business locations.
4. Development of quick charging facilities for electric vehicles
Lack of charging facilities will hinder the spread of electric vehicles. We will strongly
promote the installation of 30,000 quick charging facilities to achieve the same level ofconvenience as gasoline vehicles by 2030 at the latest.
5. Gas conversion of coal-fired private power generation, etc.
Focusing on energy-intensive industries such as steel, chemicals, pulp and paper, andcement, we will promote the conversion of coal-fired private power generation to gas and theupgrading of low-efficiency blast furnaces, coke ovens, industrial furnaces, and other facilities
to higher efficiency.
6. Development of transmission line networks to promote renewable energy
In order to accelerate the development of transmission line networks for the spread ofrenewable energy, we will promote feasibility studies (FS) on submarine transmission lines
and capital investment for manufacturing facilities for cables.

Chapter 5: Strengthening Investment in People
1. The state of the freelance protection system

19

According to the actual survey, 60% of the freelancers who have experienced problems withbusiness partners were not given written documents or e-mails in the first place, or even if theywere, the terms and conditions were not sufficiently specified. In order to improve thissituation and create an environment where freelancers can work with peace of mind, we willconsider legislative measures such as establishing rules for written contracts for transactions
between businesses and freelancers.
We will consider a safety net for freelancers.
2. Initiatives to establish telework
We will promote awareness of the guidelines regarding the application of labor standardsrelated laws and regulations in order to establish telework.
In addition, in order to promote high quality telework throughout the country, the active useof ICT tools and the development of satellite offices will be promoted.
We will encourage businesses to publicize the status of their telework implementation.
3. Realization of new ways of working, such as lifting the ban on second and side jobs
and promoting the introduction of short-time working regular employees
Responding to the needs of those who wish to work in a variety of ways and in new ways,
the goal is to provide options for second and side jobs in companies, and promote theintroduction of a variety of regular employee systems, including short-time working regular
employees. To facilitate the movement of labor in response to changes in the industrial
structure, we will promote the reform of work styles in Phase II.
We will encourage companies to adopt and promote the selective three-day workweek
system by collecting and providing good examples.
4. Promoting diversity, including the appointment of women, non-Japanese, and midcareer hires
To further strengthen the growth potential of Japanese companies, we will encourage themto transform themselves into organizations that are inclusive of diversity so that women,
foreigners, and mid-career workers can play an active role.
We will expand opportunities for people who have studied abroad, worked for internationalorganizations, and experienced different cultures.
5. Stabilizing the employment environment for the younger generation by reviewing thepersonnel evaluation system

20

The goal is to improve and stabilize the income of child-rearing generations, and stabilize
the employment environment for younger generations by reviewing the personnel evaluation
systems of companies.
6. Facilitating labor mobility
At the same time, we will support the movement of labor, without the loss of employment,
associated with industrial structural transformation, including the promotion of recurrent
education.
In particular, those whose employment has become precarious due to the COVID-19
pandemic are, as mentioned earlier, non-regular employees in the food service,accommodation, cultural arts, and entertainment industries. Especially, the impact on female
non-regular employees in their 20s to 40s is significant (Figure 8).
On the other hand, when female non-regular employees were asked why they chose nonregular employment, 10.3% said that it was because there was no work in regular employment
available, and their priority was to work convenient hours (39.9%) and to balance work withhousework, childrearing, and nursing care (19.7%) (Figure 9). In many cases, labor migration
to full-time occupations is difficult.
For these people, we will provide options for labor mobility to regular employment, which
are currently increasing, and to jobs with fewer time constraints.
For this reason, we will consider a system that allows non-regular employees to move theirlabor without loss of employment to clerical and other positions with fewer time constraints,
and with simple training. At the same time, companies are also urged to allow a variety ofwork styles, such as the spread of divided work hours and shifts, and the introduction of shorter
regular work hours.

21In response to changes in the international environment, countries are investing
unprecedented amounts of national funds and developing policies to retain important
production bases in their countries from the perspective of economic security.
In order to cope with such discontinuous changes, to protect universal values such as
freedom, democracy, and respect for fundamental human rights, and to realize a free and open
international order based on the rule of law in cooperation with like-minded countries andpartners, Japan needs to identify strategic technologies and materials that support the country’s
economic growth and security, and then take measures to protect the technologies. At the sametime as appropriately protecting them, we need to take measures that are distinct from thosetaken in the past to ensure autonomy and achieve superiority. To this end, the following
measures related to economic security will be promoted comprehensively.
As for the following urgent issues, we will sequentially establish policies to deal with themand take necessary actions while coordinating with existing projects.
(1) Ensuring technological superiority from the perspective of economic security① Identification of technology
In order to strengthen the think tank function to conduct research and analysis to contributeto the identification of important technologies, we will set up the function in this fiscal year
and develop a promotion system.
② Technology development
New projects will be created to provide strong support for the practical application ofadvanced technologies that are important from the perspective of strengthening economic
security in the fields of space, quantum, AI, supercomputers/semiconductors, nuclear power,
advanced materials, biotechnology, and oceans, through cooperation among relevant
ministries and agencies.
We will establish a system to preserve, share, and utilize important technical informationfrom the perspective of smoothly promoting international joint research and securing andmaintaining Japan’s technological superiority.
③ Preservation of technology(a) Review of export controls

23•Promptly implement a new security trade control framework that complements theexisting international export control regime.

(b) Review of inward direct investment•

In cooperation with like-minded countries, strengthen the enforcement system byutilizing the resources of the local ministries and agencies, while promoting thestrengthening of cooperation among the relevant ministries and agencies for prescreening and post-screening monitoring. In addition, a study on the nature ofdesignated industries will be promoted.

(c) Strengthen management of technical information at border•

Strengthen the screening process for accepting international students and researchers,
and promote the development of a system for this purpose.

(d) Clarification of the scope of “deemed export” control•

The provision of information to residents will be subject to control if it is considered
to be virtually the same as the provision of technical information to non-residents,
with the aim of implementation within the next fiscal year.

(e) Strengthen intelligence capabilities•

Strengthen the system necessary for collecting, analyzing, consolidating, andsharing information related to economic security.

(f) Ensuring the soundness and fairness of research•

Formulate guidelines for universities and research institutions to promoteautonomous efforts to enhance the soundness and fairness of research. In addition,
for applicants applying for competitive research funds, gradually require disclosureof the status of receipt of foreign funds, etc., starting this fiscal year, and expanding
the scope of disclosure in the next fiscal year.

(g) The state of the patent disclosure system

24•With regard to the public disclosure system of patents, study measures to makepatents private from the perspective of security while being compatible with thepromotion of innovation, keeping in mind the patent systems of other countries.

(2) Reduction of threats and improvement of autonomy related to core infrastructureand supply chains
In order to ensure safety and reliability in maintaining the functions of key infrastructureindustries, such as telecommunications, energy, finance, transportation, and medical care, thecurrent systems and operations will be inspected from the perspective of addressing risks
through the use of equipment and systems, business alliances, and outsourcing, and necessary
measures will be considered.
The supply chain will be analyzed for essential materials and technologies in key
infrastructure industries, in addition to the prioritized items such as semiconductors,
pharmaceuticals, batteries, and critical minerals including rare earths. The necessary measures
to strengthen theresilience of supply chain will be considered, including securing andstrengthening domestic production capacity and diversifying procurement.
(3) Consideration of a framework for securing medium- to long-term financial
contributions to promote the strengthening of economic security
In order to promote the strengthening of Japan’s economic security, Japan will strengthen
its R&D capabilities for advanced key technologies and secure a strategic domestic industrial
basis, including the ability to produce and supply key technologies and goods in the supply
chain. Japan will study the ways to support it, including a framework for securing medium- tolong-term financial contributions, keeping in mind the trends in major countries, and aims toestablish such support at an early stage.
2. Development of advanced semiconductor technologies and promotion of
manufacturing locations
The global semiconductor market had been expected to expand to 45 trillion yen by 2019,with further growth projected in the future. On the other hand, the share of sales ofsemiconductors by Japanese companies declined from 50.3% in 1988 to 10.0% in 2019 (Figure
10).
Of Japan’s semiconductor demand, 35.8% is domestically produced, and 64.2% isdependent on imports. Dependence on Taiwan (26.8%) and China (8.9%) as import25

destinations is high (Figure 11).
According to the U.S. Semiconductor Industry Association, Taiwan has 92% of the
manufacturing capacity for advanced semiconductors of less than 10 nanometers, while Japan
has a 5% share for 28-45 nanometers and a 13% share for over 45 nanometers, but does nothave the capacity to manufacture advanced semiconductors of 22 nanometers or less (Figure
12).
Japan has the largest number of semiconductor plants in the world, but the majority of them
are low-end semiconductor plants (Figure 13).
The goal is to actively support the design of advanced semiconductors that support thedigital society and the development of their manufacturing technologies with R&D funds andother resources. In addition, since there is a high concentration of production bases foradvanced semiconductors internationally, we will urgently promote initiatives comparable tothose in other countries and promote the location of production bases for advanced
semiconductors in Japan to build a reliable supply system.

Figure 10: Medium- to long-term trends in the semiconductor market

26

Figure 11: Ratio of imports to domestic demand for semiconductors in Japan (2017)

Figure 12: Percentage of semiconductor manufacturing capacity by size (December 2019)

Figure 13: Number of semiconductor factories in the world

3. Promoting optimal deployment of next-generation data centers
The location of a data center (a facility that installs a large number of computers and27

provides Internet connection services and data management and operation services), which isthe core of the digital infrastructure, is important from the following perspectives.
First, it has been pointed out that it is not desirable to depend on data centers in othercountries for critical data from a security perspective.
Second, the location has a significant impact on the data transmission delay. For example,
for a user located in Tokyo, the transmission delay is 0.001 seconds when the data center is inTokyo, compared to 0.069 seconds when the data center is in Singapore (Figure 14). This kindof transmission delay is a problem in ensuring the safety of automobiles in autonomous driving.
Looking at the location of data centers in Japan, 71% of them are located in the Kanto region,
with Tokyo alone accounting for 49% (Figure 15).
In order to cope with the future rapid increase in digital demand and data communication
volume, as well as to enhance data protection and disaster resilience, we will promote thedevelopment of up to five new core data centers with high performance and low power
consumption, and up to ten regional data centers, taking into account demand, for optimal
allocation in Japan.
Figure 15: Location of data centers inJapan (Server room area, 2019)

Figure 14. Average transmission delay(latency) from each city to Tokyo

大阪府
14％

4

4. Development of next-generation battery technologies and promotion of manufacturinglocationsWith the growing importance of electric vehicles, batteries, the key component of thesevehicles, will determine the future competitiveness of the automotive industry. From theperspective of strengthening the supply chain, R&D of next-generation batteries and thelocation of large-scale production bases for batteries and components that are larger than acertain scale will be promoted.

28

5. Strengthening Supply chain of key technologies and commodities such as rare earths
We will promote the development and diversification of production bases of importantminerals, including rare earths. We will strengthen the supply chain for pharmaceuticals andother products that are essential for the healthy lives of the people.
6. Strengthening manufacturing infrastructure
We will strengthen the domestic manufacturing base so that it can respond flexibly andswiftly to unforeseen events in the supply chain amid the COVID-19 pandemic and theantagonism between U.S. and China. We will also promote R&D in the fields of materials andnanotechnology.

Chapter 7: Reviving the Dynamism of Japanese Firms in a “With COVID-19”
and a “Post COVID-19” World: Creating an Environment that Both
Creates and Scales Up Startups
Although the number of startups in Japan has been on the rise in recent years, the percentage
of firms with a company age of 0-2 years in the total number of firms is only 13.9%, which islower than in the United States (20.5%), the United Kingdom (22.4%), and France (22.8%)(Figure 16).
The largest number of listed companies in Japan, 119, were founded between 1945 and 1954,
including Sony and Honda Motor, while the largest number of listed companies in the UnitedStates, 124, were founded between 1995 and 2004, including Amazon and Facebook (Figure
17).
Furthermore, there are few growing startups in Japan, and the number of unicorns (privatecompanies with a market capitalization of over $1 billion) is 274 in the United States, 123 in
China, and 67 in Europe as of March 1, 2021, compared to only 4 in Japan (Figure 18).
With an eye on the world “With COVID-19” and “Post COVID-19,” Japan needs to create
an environment that encourages companies to enter untapped fields and become leaders ingrowth.

29

Figure 16: International comparison of the distribution of companies by age

Figure 17: Comparison of the year of establishment of Japanese and U.S. listed companies

Figure 18: International comparison of the number of unicorn companies (March 1, 2021)30

startups if the opening price exceeds the offering price, though investors who acquired newshares issued at offering price immediately gain marginal profits. It has been pointed out thatstartups could have raised more proceeds with the same number of new shares.
In light of this, the government will investigate issues regarding IPO pricing process andreform it.
2. Consideration of introducing regulations to allow the listing SPACs
In the United States, SPACs (Special Purpose Acquisition Companies) which allow startups
to go public immediately after their foundation are utilized as well as traditional IPOs (Figure22). In addition, SPACs have been introduced and utilized by major exchanges not only in the
United States but also in other countries overseas (Fig. 23).
Figure 22: Number and Proceeds of SPAC IPOs (left) and traditional IPOs(right) in the U.S.

Figure 23: Possibility of SPAC listings in major exchanges

Specifically, startups go public through mergers with SPACs by the following process.
① A sponsor with expertise in assessing businesses potential found a SPAC.
② A SPAC goes public to raise funds.

③ After SPAC IPO, a sponsor searches for merger targets (startups) and conducts merger
negotiations.

④ A merger is proposed by a sponsor and approved by shareholders (including public
32

shareholders) at SPAC’s shareholder meeting.
⑤ SPACs must meet investor protection requirements, such as deposit of the proceeds fromthe SPAC’s IPO and any concurrent sale of the SPAC’s equity securities in a trust account,and redemption right (the right to convert shares of common stock into a pro rata share of
the aggregate amount on deposit in the trust account) for public shareholders voting against
the merger. SPACs often raise additional funds by making private placement investments
when they complete the merger.

⑥ A Startup goes public through a merger with a SPAC.

It has been pointed out by startups in Japan that SPACs have the potential to solve thecurrent problem of traditional IPOs that the amount of proceeds is small due to underpricing
problem as SPACs allow startups to sell their shares at reasonable price that both startups andSPAC’s investors agreed on through the merger negotiation and shareholder’s meeting. On
the other hand, some point out the need for investor protection.
The government will consider the development of regulations to allow the listing of SPACs,
such as criteria for listing (formal requirements and disclosure standards) and redemption right
exercised by shareholders in case of voting against a merger or no voting until the deadline,from the perspective of investor protection measures, U.S. and other overseas regulatory
authorities movements, market trends regarding SPACs and enhancement of Japan’sinternational competitiveness.
3. Improvement of regulation to activate private placement financing
In Japan’s capital market, individual investors have limited means of investing in unlisted
startups, and as a result, there are few investors other than venture capitalists providing capitalto unlisted startups. From the perspective of increasing the flow of risk money to unlisted
startups, the scope of professional investors (accredited investors) will be expanded by making
it more flexible based on their professional knowledge, experience and certifications, to makethe professional investor system available and useful for a wider range of individuals.
4. Promoting competition policy to optimize transactions between startups and large
companies
We have just formulated guidelines that outline problematic cases of collaboration between
startups and large companies and specific directions for improvement, as well as our approachto the Antimonopoly Act. In addition to ensuring thorough awareness, law enforcement by
the Japan Fair Trade Commission will be strengthened.

33

(1) Strengthening the supply of capital funds and promoting the subscription ofpreferred stock
In order to strengthen the financial base of companies, in the COVID-19 pandemic, we havetaken measures such as suspending the principal of private-sector syndicated loans bygovernment financial institutions and lowering the interest rate level of capital subordinatedloans to about 1% for the first three years through interest subsidies, etc. We will further
promote the supply of capital funds and the underwriting of preferred shares as necessary.
(2) Consideration of legislative aspects to expand the convenience of privatearrangements (out-of-court workouts), etc.
Unlike legal liquidation, private arrangements (out-of-court workouts) can prevent damage
to business and profitability. In order to facilitate the revitalization of businesses through suchprivate arrangements (out-of-court workouts), we will examine the legal aspects of expanding
their convenience, while taking into consideration the protection of creditors.
As for legal liquidation, we will promote a smooth transition from ADR, which is a privatearrangement (out-of-court workout), to simplified rehabilitation proceedings, which is a legal
liquidation.
2. Improving the environment for business restructuring and revitalization of SMEs
(1) Guidelines for private arrangements (out-of-court workouts) of SMEs
We will study the formulation of guidelines for private arrangements (out-of-court
workouts) for business revitalization based on the actual situation of SMEs.
(2) Dealing with personal bankruptcy
It has been pointed out that in the event of bankruptcy of SMEs, the fact that many
entrepreneurs who provide personal guarantees become personally bankrupt is a major
disincentive for SME managers to make early decisions on business restructuring. We willconsider countermeasures while giving consideration to ensuring management discipline.
(3) Initiatives by financial institutions, etc.
We will consider measures to encourage financial institutions to engage in privatearrangements (out-of-court workouts) for business restructuring.
3. Recovery of corporate profitability

35

There are various methods for business restructuring and revitalization. Debt restructuring
is one of those options, and improving intrinsic profitability is essential. In promoting businessrestructuring and revitalization, it is assumed that companies will work to improve theirprofitability for self-sustaining and sustainable growth.

Chapter 9: Competition Policy and Other Measures for New Growth
1. Promoting regulatory reform
We will further promote regulatory reform to maximize the vitality of the private sector. To
this end, we will further promote the use of systems such as National Strategic Special Zones
and regulatory sandboxes, and promote the nationwide expansion of the results of thesesystems.
2. Redesigning competition policy
The key to the growth strategy is to strengthen competition policy to improve thecompetitive environment, along with the promotion of regulatory reform. Competition policy
needs to be redesigned in light of the changing times. For this reason, we will work in thefollowing directions.
(1) Strengthening of the Japan Fair Trade Commission’s advocacy
In Europe and the United States, competition authorities have been actively advocating toother government agencies to improve competition, and the competitive environment has beensteadily improved. In Japan, too, the effectiveness of the advocacy function of the Japan Fair
Trade Commission should be strengthened, including the promotion of the entry of startups
and SMEs, and in infrastructure fields such as the digital market (e.g., telecommunications)and the energy market (e.g., electricity), while utilizing highly specialized external personnel.
(2) Strengthening of the structure and enforcement of the Japan Fair Trade
Commission
To strengthen the structure and enforcement of the Japan Fair Trade Commission, thehuman resources aspect will be enhanced quantitatively and qualitatively.

Chapter 10: Building Strong SMEs
1. Support for business continuity and business restructuring of SMEs
36

We will continue to take all possible measures to support the business continuity of SMEs
affected by the COVID-19 pandemic, and to support SMEs that are actively engaged inbusiness restructuring we will constantly review the business restructuring subsidies.
2. Increasing labor productivity through the growth of SMEs
In order to increase the number of companies that can grow into medium-sized companies
and compete overseas, we will strengthen our support for companies to expand overseas incooperation with private sector support organizations.
The goal is to encourage smooth business succession of SMEs and create an environment
in which SMEs can properly utilize support for M&A. Specifically, the government will ①
strengthen business succession and succession support centers, ② develop a simple corporate

value assessment tool, and ③ establish a system to encourage appropriate efforts by support

organizations, such as a registration system for M&A support organizations and theestablishment of a self-regulatory organization.

Taking a cue from the Fraunhofer-Gesellschaft model for creating a strong SME cluster, we
will consider support systems for ambitious SMEs, including consideration of strengthening
the functions of existing R&D institutions.
3. Appropriate transactions between large companies and SMEs
(1) Appropriate subcontracting transactions
We will strengthen the supervisory system to prevent adversely distorting transaction prices
for subcontractors. In addition, we will accelerate the formulation of voluntary action plans by
the industry, and promote the strengthening of initiatives not only by the industry but also by
individual companies as part of the improvement of corporate governance.
(2) Promotion of cooperation between large businesses and SMEs
With regard to "Partnership Construction Declaration", which aims for co-existence andco-prosperity between large enterprises and SMEs, the public and private sectors will work
together to publicize and encourage the declaration, aiming to have 2,000 companies issue
their declarations by the end of this fiscal year, and to strengthen cooperation between large
enterprises and SMEs by expanding the number of declarations.
(3) Abolition of the use of promissory notes
We will promote efforts to abolish the use of promissory notes in five years by requesting37

the formulation of a voluntary action plan by the industrial and financial sectors by thissummer. First of all, we will promote the shortening of the payment terms for promissory notes
related to the payment of subcontract proceeds to 60 days or less. In addition, checks will befully computerized.
(4) Expansion of transactions beyond corporate affiliates
Through the standardization of electronic ordering, receiving and other systems, we will
promote the use of such systems not only by SMEs but also by ordering companies, etc., andencourage SMEs and small businesses to expand transactions beyond their affiliations.
4. Support for local SMEs and small businesses, etc.
Local SMEs and small businesses play an important role not only in local employment, butalso in supporting the local community, especially in a community where the population is
declining. In order to improve the productivity of these businesses while securing functions
essential to their daily lives, local and national governments will work together to create
leaders in community building and strengthen efforts to support local communities throughSMEs and other businesses.
5. Enhancement of management support through public-private cooperation
In order for businesses trying to recover from the COVID-19 pandemic to receive
appropriate management support, a network of support organizations, including those in theprivate sector, will be established in each region, and the expertise of individual support
organizations will be made visible. As part of this effort, we will promote the visualization of
the areas of expertise required of SME Management Consultants as familiar providers of
support.

Chapter 11: Strengthening Investment in Innovation
As stated above, Japan will make concentrated investments in innovation in the digital andgreen fields. In addition to the above, the following initiatives will be implemented.
1. Promoting reverse innovation
Reverse innovation is accelerating, where new products and services are created andreimported to developed countries by utilizing cutting-edge technologies to overcome
challenges unique to emerging countries. It is important to promote this in Japan as well, and38

to link it to changes in the corporate culture of Japanese companies and to structural reforms
in Japan. To this end, we will strongly promote joint projects undertaken by Japanese and other
Asian companies.
2. Promoting the integration of the humanities and sciences
Through faculty reforms and other measures, we will overcome the barriers between science,
humanities, and other disciplines to transform society through the results of our R&D, andgreatly enhance our investment in the development of research personnel.
3. Accelerating R&D of cutting-edge technologies such as quantum technologies
By accelerating cutting-edge R&D in areas such as AI and quantum technology, we will beable to respond to the threats we face, such as infectious diseases and increasingly severe
disasters, and use this as a driving force for our next phase of growth. The goal is todramatically strengthen moonshot R&D in order to promote innovative R&D. We will
strategically promote R&D, social implementation, and human resource development inpriority fields such as innovative environmental technology, AI technology, biotechnology,
quantum technology, material technology, and space development and utilization.
To this end, we will work toward achieving the government’s investment targets of 30
trillion yen in R&D and 120 trillion yen in public and private sector investment over the next
five years, and lead the international competition in R&D.
4. University reform through the creation of the University Endowment Fund, etc.
Aiming to create world-class research universities that attract outstanding human resources
and abundant funds, we will set a goal of expanding the University Endowment Fund to a scaleof 10 trillion yen by the end of this fiscal year. A new legal framework for university reform
will be considered as soon as possible and submitted to the next ordinary Diet session.
In addition, support for doctoral students will be steadily implemented, and support
measures to promote regional universities will be strengthened.
5. Promoting intellectual property strategy
We will accelerate efforts to strategically utilize international standards, focusing on key
areas such as smart cities and Beyond 5G.
We will also promote investment in intellectual property and other intangible assets. In orderfor investors and financial institutions to properly evaluate corporate investment in intellectual39

property and strategies for its utilization, guidelines for its disclosure will be formulated thisyear and disclosure will be encouraged.
In order to create an environment for the sustainable development of the content industry,the copyright system will be reviewed, and efforts will be made to increase productivity at
production sites and improve the trading environment.
6. The 2025 World Exposition in Japan as a testing ground for the society of the future
The public and private sectors will work together to accelerate preparations to make theExpo 2025 Osaka, Kansai, Japan, a place to present the state of “Post COVID-19” society. The
event will showcase new technologies and systems, including technologies to promote green
innovation, and be a people`s Living Lab where people can experience Society 5.0.
7. Creating new industries in Fukushima
We will promote the Fukushima Innovation Coast Framework, Fukushima Plan for a New
Energy Society, etc.

Chapter 12: Corporate Governance Reform
Seeking sustainable corporate growth and increased corporate value over the mid- to longterm, the government will promote the following initiatives based on the revised Corporate
Governance Code.
To make the board more effective, increase in the number of independent directors from atleast two to at least one-third of the board for Prime Market listed companies.
To promote diversity in core human resources, disclose a policy and voluntary measurable
targets in respect of promoting diversity in senior management by appointing females, nonJapanese and mid- career professionals.

Chapter 13: Initiatives in Important Fields
1. Development and production of vaccines in Japan
Based on the “Strategy for Strengthening Vaccine Development and Production System”(approved by the Cabinet on June 1, 2021), in order to build a research, development andproduction system that can develop and produce vaccines domestically and supply them
promptly, the following measures will be taken:•

establishment of a world-class R&D base,40

•strengthening of the funding function for strategic research expenses,•

development and expansion of the clinical trial environment,•

development of a system and standards to speed up the pharmaceutical approval
process, development of a vaccine manufacturing base, and•fostering and promotion of the vaccine development and manufacturing industry.

In addition, financial resources for the initiatives necessary for this purpose will be secured ina stable manner.
2. Growth strategies for the pharmaceutical industry
Life science is a key strategic area along with digital and green, and is also an importantarea for security.
In order to create an innovation environment in which pharmaceutical companies that create
innovative new drugs can grow, the government will•

strengthen R&D support,•

support drug discovery ventures,•promote international joint clinical trials,•

strengthen the domestic biopharmaceutical industry,•

promote the implementation plan for whole genome analysis and the roadmap basedon this plan, and•establish a system that enables a wide range of analysis and utilization by parties
involved in industry, government, and academia.

In addition, the following measures will be taken:•

establishment of a system that enables a wide range of analysis and utilization byindustry, government, and academia;•

development of an environment that facilitates the utilization of medical
information;•

examination of the evaluation of new drug innovation and long-term listed productsin the National Health Insurance (NHI) drug pricing system;•

development of a data bank for infectious diseases;•

examination of the rationalization of research procedures based on the ClinicalResearch Law, including legal amendments; and•support for the consolidation of pharmaceutical companies.

For high-priority drugs that are essential for medical care, widely used, and for which41special consideration must be given to ensuring a stable supply, we will consider setting NHI
prices, supporting the domestic production of raw materials for drugs such as antibacterial
agents that require stable supplies, stockpiling systems, and introducing emergency purchases,from the perspective of supporting a continuous stable supply for the entire nation. In addition,
we will promote measures against drug resistance (AMR) through a One Health approach (i.e.,
cooperation among related parties to solve cross-cutting issues related to human and animal
health and the environment).
To establish a system in which generic drug manufacturers are responsible for ensuring
quality, stable supply, and reliability of data, we will ensure appropriate manufacturing andquality control systems by manufacturers and distributors. Even in the case of co-development,
confirmation regarding the assurance of data reliability should be conducted at the time of
approval review.
To promote the development and use of biosimilars (drugs with the same quality, etc., asdomestically approved biopharmaceuticals), a conclusion on future government targets should
be reached promptly. Specific measures to promote the use of biosimilars will be discussed.
The ban on online medical treatment will be lifted in principle from the first visit for family
doctors, based on safety and reliability.
To promote the use of OTC diagnostic pharmaceuticals sold over the counter at pharmacies,
it is necessary to ensure their safety, etc., and self-care and self-medication will be promoted
by promoting studies on the conversion of individual items to OTC.
In the distribution structure of ethical pharmaceuticals, there are business practices in which
the prices sold by pharmaceutical manufacturers to wholesalers exceed the prices sold bywholesalers to medical institutions and pharmacies, and business practices in which prices anddiscount rates for all items purchased by medical institutions and pharmacies are negotiatedtogether. In order to improve these practices, measures including a review of the distribution
improvement guidelines will be considered.
Given new health issues have arisen due to the COVID-19 pandemic, we will promotesupport for the prevention of onset and progression of serious illness, and health promotion
based on the insurer support system and funding to further strengthen insurer functions for theLong-Term Care Insurance (LTCI) program.
Results of demonstration projects to confirm and accumulate evidence on the healthpromoting effects for the prevention of the onset and progression of serious illness, and healthpromotion will be utilized in preventive health projects by insurers and local governments,

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such as the review of specified health checkups and specified health guidance.
We will promote data health reform and improve the environment for the utilization of
personal health and medical information. In addition, we will enhance the National Databaseof Health Insurance Claims and Specific Health Checkups of Japan (NDB) to improve its
convenience for research use.
The review system in general will be reviewed tirelessly to promote the development andcommercialization of programmed medical devices, such as therapeutic applications, and tocontribute to the improvement of predictability for developing companies.
We will promote the international standardization of Kampo medicines, which willcontribute to the domestic production of crude drugs and the strengthening of thecompetitiveness of domestic industries.
We will also establish a government headquarters function to establish an ecosystem for thepharmaceutical industry.
3. Oceans
From the perspective of economic security and the development of marine-related industries
into a growth industry, we will strengthen Maritime Domain Awareness (MDA) capacity andstrengthen ocean initiatives for carbon neutrality and resource development.
Specifically, we will utilize and share oceanographic data such as sea surface temperature,
ocean currents, and vessel traffic among the public and private sectors, as well as accelerate
research in the Arctic region, including secure construction of the Arctic research vessel. In
addition to promoting the introduction of offshore wind power generation and the developmentof marine resources such as rare earth mud and methane hydrate, which are world leading, we
will also develop unmanned oceanographic observation technology and enhance ourobservation systems.
4. Space
Space development and utilization will be strongly promoted from the viewpoint that space
is a growth industry and is indispensable for security, disaster prevention, and achievement of
the SDGs.
The goal is to build a small satellite constellation under public-private cooperation bypromoting anchor tenancy (guaranteed procurement by government), etc. We will also
promote the demonstration of next-generation technologies such as on-orbit data processing
and optical communications. We will respond to social issues by building an integrated G-

43space disaster prevention and mitigation system using quasi-zenith satellites and observation
satellites, observing greenhouse gases, and R&D for the Space Solar Power Systems, etc. In
addition to promoting space exploration, such as the Artemis Project and sample collection
from the Martian atmosphere, Japan aims to become a core base for space business in Asia,
including the development of a spaceport, with a view to Japan-US space industry cooperation.
We will work towards completion of the H3 rocket and R&D of future space transportation
systems.
5. Strengthening promotion of PPP/PFI
We will follow up on past growth strategies and consider new issues related to the promotionof the use of PPP/PFI.
6. Realizing an International Financial Center
Taking advantage of business potential with household assets worth more than 18 trillion
dollars, the government will strategically reform financial and capital markets to make themmore attractive for foreign businesses and highly skilled professionals. The firewall
regulations (restrictions of sharing client’s information between banks and securities entity
within the same financial group without customer consent) concerning domestic corporateclients will be reviewed from the perspectives of interests of clients, proper management ofconflicts of interest and prevention of abuse of superior bargaining position, in order topromote the better-functioning of Japan's capital markets, improving the attractiveness of themarkets as an International Financial Center and the provision of better financial services. The
government work on to make English communication available in supporting newly entering
foreign banks and securities companies in terms of pre-application consultation, registrationand supervision, facilitate and expedite the procedures for awarding preferential immigration
treatment points to highly-skilled foreign professionals depending on their features, andstrategically offer information assumed to be important for foreign financial businesses,
including the investment strategies of major domestic asset owners such as pension funds.
7. Promoting direct investment in Japan
Based on the new medium- to long-term strategy, we will mobilize all our policies andefforts to promote direct investment in Japan, while taking all possible measures from thesecurity perspective. By doing so, we aim to increase the balance of FDI in Japan to 80 trillion
yen by 2030, or 12% of GDP.

44

8. Institutional reform in individual fields(1) Development of system for automated delivery robots
In order to provide non-contact automated delivery services that will improve the safety ofusers and employees as the period of “With COVID-19” continues for a certain period of time,
the government plans to submit the bills to revise relevant laws and regulations to the Diet as
early as possible by the end of this fiscal year on the premise of encouraging industry toconsider creating a voluntary standard and a certification scheme to improve the safety and thereliability of the robots.
The main contents of those bills will be the following:・ excluding low-speed and small-sized automated delivery robots from the category ofroad transport vehicles
・ requiring service providers to notify their contact details, service areas, and otherinformation in advance・ enabling administrative agencies to take legal action when the providers violate safety
management obligations(2) Establishment of a system for electric scooters
We will review the relevant systems for the use of electric scooters on road, based on the
results of demonstration businesses Specifically, we will study the revision of the system
regarding traffic rules, including the establishment of new vehicle categories based on
maximum speed, etc., place to drive, and the necessity of helmets and licenses, etc. Based on
the results of the study, we will submit the relevant bills as early as possible this fiscal year.
(3) System development for drones, etc.
With the aim of overcoming the various challenges facing Japan, such as the declining
birthrate, aging population, depopulation, and lack of human resources, we will proceed withthe detailed design of a system to certify the safety of drones and the skills of the pilot in orderto achieve drones flights beyond line of sight in populated areas within the next fiscal year. In
addition, with regard to flying cars, the government will promote the development of a system
for safety standards for such vehicles and their operation, as well as standards for certifying
the skills of pilots, with the aim of related business activity launching in 2023.

45

(4) Development of Cashless Payment
In Japan, it is pointed out that the high cost of credit card merchant fees has been one of the
obstacles to the expansion of cashless payments. According to the interviews with businesses,
interchange fees (fees paid from acquirer to issuer with every credit card transaction) accountfor about 70% of merchant fees. In light of this, an investigation by the Japan Fair Trade
Commission and further studies for increasing market transparency by the relevant ministries
and agencies will be conducted.

Chapter 14: Regional Development
The spread of COVID-19 has triggered a growing interest in rural areas. By encouraging
changes such as the expansion of teleworking and digitalization, we will create a large flow ofpeople to the regions, which will lead to rebalancing of the concentration of people in Tokyoand the creation of vibrant regions.
1. Realizing a tourism-oriented country
Tourism is a trump card for local development, and we will work to restore domestic
demand while supporting the continuation of business and the maintenance of employment,
and taking thorough measures to prevent the spread of COVID-19 infection. We will also
promote the development of attractive tourist areas and contents. Furthermore, we will workon the gradual revival of inbound tourism while monitoring the COVID-19 infection situationin Japan and abroad.
2. Creation of vibrant communities in agricultural and/or mountainous areas and fishingvillages through the development of growth industries in agriculture, forestry andfisheries
In order to achieve the export value targets of 2 trillion yen in 2025 and 5 trillion yen in
2030 for agricultural, forestry, fishery and food products, the government will promote reforms
to make the industries related to these products leading growth industries in the rural areas.
This will be done by providing priority support for 27 priority products and more than 1,200
communities and businesses who are specializing in the export of these products. In this way,
the government aims to increase incomes and create vibrant communities in agricultural and/or
mountainous areas and fishing villages. In addition, in light of the tight international supply
and high demand for lumber, the establishment of a stable supply system for domestic lumber

46

will be promoted.
3. Strengthening the business foundations of regional banks
To strengthen the business foundations of regional banks, which play a vital role in local
economies, the government will support regional banks that aim to reform their business. The
government will also accelerate the efforts of regional banks toward revitalization of local
economies by promoting sharing the know-how to support local businesses among them.
4. Promoting the matching between management personnel and local companies
In order to create a flow of human resources from large companies to regional SMEs and tohelp regional companies in securing management personnel, the government will work on to
expand the list of human resources maintained by the government fund aiming to list about
10,000 people as early as possible. In addition, a subsidy will be offered to local companies
that have secured management personnel from the list.
5. Expanding the flow of people from urban areas to rural areas by promoting teleworkand other measures that contribute to regional development
In order to further promote telework that contributes to regional development, we will
promote the development and use of satellite offices and encourage the development ofbusinesses by companies that have advanced into the regions to solve regional issues. In
addition, we will promote the establishment of satellite campuses in regional areas foruniversities and other institutions in the Tokyo area. Moreover, we will also encourage thedispatch and migration of human resources and the relocation of corporate headquartersfunctions to the regions.
6. Revitalizing local public transportation
In order to maintain and revitalize public transportation, which supports the local economy,
we will support operators who are working to improve their profitability through the use ofdigital technology, etc., and promote initiatives to improve convenience for users, such as joint
management.
7. Promoting the Super City Initiative, etc.
In order to formulate Smart Cities, we will promote the creation of city cases driven by the
Data Linkage Platform, etc. throughout the country, focusing on priority development areas.
We will strongly promote the Super City Initiative. We will work toward early realization47

of the initiative by promptly designating zones and concentrating investment by relevant
ministries and agencies.
8. Securing human resources for community development
In accordance with the Law for the Promotion of Regional Development in Areas with
Rapidly Declining Populations, we aim to secure local economic leaders in areas with rapidly
declining populations.
9. Land policy
In order to promote rapid social infrastructure development in the regions, the government
will improve the system for smooth utilization and management of land with unknown owners.

Chapter 15: Realizing a Vibrant Japanese Economy in a New Environment of
Global Competition
1. Leading the free, fair and rule-based international economic system
In the new international competitive environment brought about by the COVID-19
pandemic, Japan will continue to lead the free, fair and rule-based international economic
system.
In order to ensure a level playing field, we will work to correct market-distorting measures
such as industrial subsidies and formulate rules for electronic commerce, etc.
We will promote the early entry into force of the Regional Comprehensive Economic
Partnership Agreement (RCEP) and ensure its implementation by each country. The
government will strategically promote the digitization of trade-related procedures and pursue
the negotiation of other economic partnership and investment agreements.
We will lead the discussion for the steady implementation and expansion of the TransPacific Partnership Agreement.
We will also promote policy discussion toward international rule-making for “Data Free
Flow with Trust (DFFT)” agreed at the G20 Osaka Summit in June 2019.
2. Expanding cooperation with like-minded countries that share our fundamental values
We will maintain and strengthen the international order based on fundamental values andrules, including climate change and human rights, taking into account the perspective of
economic security.
We will also concretize cooperation for regional supply chain resilience to realize a free and48

open Indo-Pacific.
Through dialogues with the United States or the European countries, and other frameworks
such as the G7, we will promote discussions with the countries and regions which sharefundamental values, and strengthen cooperation in the fields such as supply of vaccine,production of semiconductors and other critical goods, cooperation on emerging technology,
and response to the climate change.

Chapter 16: Follow-up
In promoting growth strategies, appropriate KPIs should be set, progress should bemonitored and analyzed, and the effectiveness of policies should be verified continuously, andnecessary follow-up should be conducted, including the addition and revision of policies.
Source list:
Figure 1: Prepared based on Jan De Loecker and Jan Eeckhout (2018), “Global Market Power,” NBER Working Paper No.
24768.
Figure 2: Adapted from Diez Leigh, and Tambunlertchai (2018), “Global Market Power and its Macroeconomic Implications,”
IMF Working Paper No. 18/137. Analysis using 465,000 data points (80,000 for Japanese companies and 130,000 for
U.S. companies) from 1980 to 2016 in Thomson Reuters’ database of listed companies.
Figure 3: Prepared based on OECD (2017), OECD Science, Technology, and Industry Scoreboard 2017. In a survey ofcompanies, the percentage of companies that responded, “Introduced a new product or service (including the additionof new functions or significant improvements in usage) in 2012-14.
Figure 4: Prepared based on Bloomberg. The TOPIX 500 consists of the top 500 companies listed on the First Section of theTokyo Stock Exchange in terms of stock trading volume and market capitalization. The S&P 500 consists of the top
500 companies listed on U.S. stock exchanges (New York Stock Exchange, NASDAQ, etc.) with the largest stock
trading volume and market capitalization. The STOXX 600 consists of the top 600 companies with the largest stock
trading volume among companies listed on stock exchanges in 17 European countries (UK, Germany, France, etc.).
Samples of constituent stocks as of the end of March 2021 for which data was available (Japan: 459 companies, U.S.:
442 companies, Europe: 290 companies).
Figure 5: Prepared based on “JCB Consumption NOW” by Nowcast Corporation and JCB Corporation. A consumption index
created by using credit card payment data from 1 million randomly selected JCB Group Card members in various
regions of Japan. The service industry includes food services, accommodation, travel, medical care, communications,transportation, entertainment, and content distribution. The figures incorporate both changes in per capita consumption
and changes in the number of consumers.
Figure 6:Prepared based on the Labor Force Survey (Basic Tabulation), Statistics Bureau, Ministry of Internal Affairs andCommunications, released on April 30, 2021.
Figure 7: Prepared based on the Labor Force Survey (Basic Tabulation), Statistics Bureau, Ministry of Internal Affairs andCommunications (released April 30, 2021).
Figure 8: Prepared based on the Labor Force Survey (Basic Aggregate), Statistics Bureau, Ministry of Internal Affairs andCommunications (released April 30, 2021).

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Figure 9:Prepared based on the Labor Force Survey (Detailed Tabulation), Statistics Bureau, Ministry of Internal Affairs andCommunications (released on February 16, 2021). Average of responses at the end of each month. Multiple responses.
Results of responses to the question “Why are you in your current employment type?” (question for non-regular
employees)
Figure 10: Prepared based on data from the Ministry of Economy, Trade and Industry (original data from Omdia).
Figure 11: Prepared based on “2017 Extended Input-Output Table (2015 Base)” by Ministry of Economy, Trade and Industry
and “Trade Statistics of Japan” by Ministry of Finance. The total value of semiconductor devices and integrated circuits.
For the import value of Taiwan and South Korea, the value in the trade statistics is used because the integrated value
is published in the extended Input-Output table. EU: the combined total includes Sweden, Denmark, the UK, Ireland,
the Netherlands, Belgium, Luxembourg, France, Germany, Portugal, Spain, Italy, Malta, Finland, Poland, Austria,
Hungary, Greece, Romania, Bulgaria, Cyprus, Estonia, Latvia, Lithuania, Slovenia, Czech Republic, and Slovakia.
Figure 12: Prepared based on Semiconductor Industry Association, Boston Consulting Group “Strengthening the Global
Semiconductor Supply Chain in an Uncertain Era” (published in April 2021). Manufacturing capacity for logic
semiconductors (semiconductors that perform control, processing, and arithmetic operations).
Figure 13: Prepared based on data from the Ministry of Economy, Trade and Industry (original data from Omdia). Numberof semiconductor plants in the front-end process (the process of forming circuits on silicon wafers until IC chips aremade).
Figure 14:Prepared based on WonderNetwork “Global Ping Statistics.” The “ping value” (the time it takes to send and receivedata) between each city and Tokyo as of April 2021.
Figure 15:Prepared based on “FY2019 Data Center Survey” by Japan Data Center Council. Results of a survey of 78 data
center operators in Japan conducted between December 2019 and February 2020. Ratio of server room area of eachregional data center to the total server room area.
Figure 16:Prepared based on Kenta Ikeuchi, Keiko Ito, Kyoji Fukao, and Hyeok Gong, “The Dynamics of Employment andProductivity in Japan: Contributions to the OECD Dynemp/MultiProd Project and International Comparisons,” RIETI
Discussion Paper (November 2019). Target companies are those with less than 50 employees. U.K. and U.S. are annual
averages of figures from 2001-2011. France is the annual average of the figures for 2001-2007.
Figure 17: Prepared based on Bloomberg. Plot of constituents by year of establishment as at the end of March 2020, based on
Bloomberg data.
Figure 18: Prepared based on CB Insights “The Complete List of Unicorn Companies.” Breakdown by country of the numberof unicorn companies (private companies with a market capitalization of over $1 billion) as of March 1, 2021 (528companies in total). Note that market capitalization is an estimate by CB Insights. Europe: the combined total of U.K.
(26 companies), Germany (15), France (7), Switzerland (5), Sweden (3), Netherlands (3), Spain (2), Luxembourg (1),Lithuania (1), Ireland (1), Estonia (1), Croatia (1), Belgium (1).
Figure 19: Prepared based on Dealogic data. Figures are calculated based on the country where the company is listed(including SPAC listings).
Figure 20: Prepared based on Tim Loughran, Jay R. Ritter, and Kristian Rydqvist (1994, data updated February 25, 2021),“Initial Public Offerings: International Insights,” Pacific-Basin Finance Journal. Japan, 3,849, 1970-2020; Canada, 758,
1971-2017; France, 834, 1983-2017; Italy, 413, 1985-2018; UK, 5,185, 1959-2016; US, 13,409, 1960-2020; Germany,
840, 1978-2020. The value obtained by dividing the opening price by the offering price and then subtracting one(average opening price return).
Figure 21: Prepared based on Kaneko, T. (2019), “Economic Analysis of IPOs: Solving the Mystery of Underpricing,” andBoehmer et al. (2006), “Do Institutions Receive Favorable Allocations in IPOs with Better Long-Run Returns?” For
the U.S., the survey covered IPOs in the U.S. between 1997 and 2001(sample size: 441). For Japan, the survey covered
IPOs in Japan between 2006 and 2017 (sample size: 761).

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Figure 22: Prepared based on SPAC Analytics data. Figures for the U.S. are for IPOs of $40 million or more (excluding IPOs
that are not publicly offered at the time of listing). A SPAC (Special Purpose Acquisition Company) is a special purpose
company for the purpose of acquiring unlisted companies, which is listed immediately after its creation and raises
funds from general investors.
Figure 23: Prepared based on the regulations and websites of stock exchanges in each country.
Figure 24: Prepared based on the Bank of Japan’s “Flow of Funds Statistics” (released on March 17, 2021). Changes in the
total amount of debt (loans to financial institutions and bonds issued) for private non-financial corporations and public
non-financial corporations (NTT, JR, NEXCO companies, local road authorities, etc.).
Figure 25: Prepared based on “Survey on Excessive Debt,” Tokyo Shoko Research, April 15, 2021. Results of a questionnaire
survey conducted from April 1 to April 12, 2021 among large companies and SMEs nationwide. Which of the following
is the status of your company’s debt? (Number of responses: 8,473 companies)

51