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.