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The government will set up in February a new framework to back up cooperation between midsize companies in rural areas and foreign startups, mainly from Asia, aiming to promote private-sector digital operations, informed sources said Tuesday.

The framework is designed to encourage Japanese companies to reform their businesses through the joint development of goods and services related to digital transformation with foreign partners.

The government plans to provide intensive support in five fields, including decarbonization, a key policy of the administration of Prime Minister Yoshihide Suga, and health care, the importance of which has been growing amid the novel coronavirus pandemic, the sources said.

According to the sources, the other three are: next-generation mobility; retail business, for which digitalization is progressing amid the pandemic, and agritech, which combines agriculture and digital technology.

Moves for digital transformation have been accelerating in Asia.

Under the new framework, the industry ministry will take the lead in matching midsize Japanese firms with foreign startups that have unique services and technologies mainly by setting up business meetings and conducting market research based on advice from experts, the sources said.

On top of joint development of products and services, the ministry will help Japanese firms invest in and acquire overseas companies through the framework.

The initiative is expected to mainly target companies from Singapore, India, Indonesia, Vietnam, Australia and Israel as possible partners for Japanese companies, the sources said.

The government aims to achieve net-zero emissions of greenhouse gases by 2050, as well as spread offshore wind power generation by helping improve technologies related to large windmills. Tokyo wants the new framework to promote digital transformation at Japanese makers of related parts and materials, and their overseas operations.

Japan ranked 27th in the 2020 digital competitiveness survey conducted by Switzerland's International Institute for Management Development, far behind Singapore, Hong Kong and South Korea, which came in second, fifth and eighth, respectively.

"If Japanese companies tie up with foreign firms with excellent data analysis skills, a momentum to reform will spread in Japan," a senior official at the ministry said.

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