Japan must change its policy from supporting all small businesses — including weak ones — to promoting competitive small companies and startups, the Small and Medium Enterprise Policymaking Council said in a report submitted to Prime Minister Keizo Obuchi on Wednesday.

Calling the 1963 Small and Medium Enterprise Basic Law outdated, the advisory panel urged the government to rectify its policy in ways that encourage innovative and competitive firms. The 1963 law was aimed at correcting the productivity gap between large-scale firms and smaller ones.

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