While the media have highlighted Prime Minister Shinzo Abe’s large-scale government spending on public works, and high expectations for his so-called Abenomics drove share prices up and weakened the yen, the important question is; what industries does Abe’s administration want to promote as driving forces of the economy?
Abe’s administration roughly identified such growth sectors, including energy-efficiency technology, in the emergency economic measures to revitalize the Japanese economy announced Jan. 11.
Abe’s selection of growth sectors do not perfectly mirror that of the previous administration led by Yoshihiko Noda, but both identify environmental technology, medical technology and inbound tourism, among others, as growth sectors the government should promote.
Abe’s Jan. 11 economic measures are still rough, and his administration is planning to come up with specific measures in June.
Noda, whose Democratic Party of Japan lost its political helm to Abe’s Liberal Democratic Party in a general election last month, already created his version of specific measures last July.
To be sure, one of the top priority projects of both administrations’ economic revitalization measures is the revitalization of the Tohoku region from the devastation of the earthquake, tsunami and nuclear disasters. Strengthening growth sectors is a secondary item.
Government officials who created the July measures said Abe’s administration will likely refer to the July plan and come up with something similar because Abe and Noda probably do not have different views on the sectors in which Japan is strong.
“It is obvious in everybody’s eyes that Japan should strengthen environmental technology. It is important because it is a growth sector worldwide. Also, the LDP said it will reduce the reliance on nuclear power,” said Tomohito Ihara, who created details of Japan’s target on the green energy sector in the July measures and was a member of the now-disbanded National Policy Unit in the Cabinet Secretariat of the DPJ administration. He works for a green energy venture company.
On green energy, the government spelled out economic measures that will support related industries to promote an energy-efficient society by giving various financial support to sectors such as “smart communities” and electric vehicles.
The July measures, which were approved by the then-Cabinet members, may give a hint of how Japan will approach targets for various green energy projects.
In those measures, the previous administration said Japan would create a new market in the environmental sector worth more than ¥50 trillion and 1.4 million jobs by 2020.
Also, the measures stipulated that the government would help Japanese companies achieve a 50 percent market share in rechargeable batteries, which is expected to be worth ¥10 trillion, in 2020, up from 18 percent currently.
Japan aims to establish its position as the leading country in smart community infrastructure, whose market value is expected to expand to about ¥20 trillion in 2020. Smart community is a term used to describe a network of houses, buildings and other social infrastructures configured to optimize the energy consumption of the entire community.
On sectors other than green energy, Abe’s government plans to promote medical innovation, including research on induced pluripotent stem cells (iPS cells), by building appropriate facilities and loosening regulations on medicine and medical equipment, among other measures.
The government also aims to strengthen the promotion of inbound tourism, especially from Southeast Asia, and inbound business tourism through MICE, a word coined by combining the initials of meeting, incentive tour, convention or conference and exhibition.
Japan has been targeting a significant increase in tourism numbers, hoping to achieve 25 million annually by 2020, compared to 8 million currently. Japan will also alter its immigration policy to smoothen the entry and exit of people.
The administration says the government will provide support for small and medium-size enterprises, inbound tourism, the financial industry, education and training, and the science and innovation sectors.
Japan will have to wait until June for the details of the Abe administration’s plan.