If Japan is to regain its competitiveness, the government must take drastic and extensive action to increase research and development and make the country a base for value-added industries, according to a report Friday by a government panel.
With that aim in mind, the advisory panel to Minister of Economy, Trade and Industry Takeo Hiranuma recommended the compilation of an action plan by the end of this fiscal year to focus on four key areas: information technology, the environment, biotechnology and nanotechnology.
The panel also proposed implementing tax reforms to facilitate investment in R&D and promoting technological innovations, while simultaneously providing funds for companies attempting to launch new businesses based on cutting-edge technologies.
“We need to take bold action to carry out tax and fiscal reforms, as well as regulatory reforms, in order to revitalize the country’s industrial competitiveness,” Hiranuma told a news conference.
Hiranuma will propose the recommendations detailed in the report during the next meeting of the Council on Economic and Fiscal Policy, a key government panel headed by Prime Minister Junichiro Koizumi, on Monday.
On the international front, the panel proposed the creation of what it described as an East Asia free business sphere through the promotion of free-trade agreements with countries in the area, and harmonizing economic and legal environments within the region.
To free up business activities within the region, the panel is calling for enabling the free movements of goods, services and people through such measures as the abolition of tariffs within the region and simplifying procedures for people moving beyond national borders.
Japan is currently stepping up efforts to form free-trade agreements with South Korea and the Association of Southeast Asian Nations.
The panel also recommended improving the industrial rehabilitation law to facilitate corporate restructuring as well as reorganization within industries.
To that end, the panel recommended helping firms dispose of excessive facilities and providing assistance that allows them to flexibly cope with employment problems through special measures under the Corporate Law and other legal frameworks, as well as offering support to people who lose their jobs as a result of such restructuring.
While approving its report, some panel members indicated that ways to achieve these aims need to be clarified and that the government should speed up introduction of the measures, according to a senior ministry official.
The panel, which consists of a scholar and business leaders, adopted the report as a collection of emergency policy recommendations designed to revitalize the economy.
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